A while ago, I got a letter from a friend (whom I’ll call “Mary”) struggling with why God allows evil. Some people had told her that God was working through terrible tragedies to produce a greater good (Rom. 8:28). Others had told her that Satan was the cause of evil and that greater faith and use of her authority in Christ would deliver her from difficulties. Mary found little comfort in these well-meaning professions, and in fact was beginning to think that God was either cruel, impotent, or worse, non-existent, a classic case of the problem of evil.
What follows is my response to her questioning. I trust it will be helpful to you as well, or at least get you thinking more deeply about God’s response to evil.
Before I begin a response to your questions, I want to let you know that my heart grieves for your situation and that I understand why you feel so hurt. I don’t want to minimize that grief in what follows. Also, I want to offer this caveat. These are questions that have been pondered for a long time, and I'm sure that many, better students of the Bible than myself would be able to give you much better-considered answers. If you’re open to it, I’ll see if I can suggest some good resources in the next few weeks.
So, here goes.
Both positions you shy away from – that God directly causes bad things to happen in the lives of people in order to produce some good result and that Satan is the cause of all suffering – are vast over-generalizations and for that reason off the mark. You are right to be leery of them. There are four reasons that I can think of for bad things happening in the world.
(1) By far the most common reason is that the world is fallen. It is not a perfect place; death and decay are fundamental operating principles in the present. Sickness, disease, natural disasters, accidents, and other tragedies are natural consequences of a fallen world (Luke 13:1-5). Though God could chose to intervene to avert every tragedy, he doesn't. Rather, he intervened decisively to redeem the fallen world entirely but incrementally (at the same time identifying with its suffering [Heb. 2:9-10, 18]). He redeems fallen souls now, but he will ultimately restore the physical universe (including our physical bodies) in the future (Rom. 8:18-23), after Jesus returns. That is, the world isn't the way God intends it to be, but he has acted to begin to rectify that. Until then, we will suffer the inevitable consequences of living in this fallen world.
(2) The other most common reason for bad things happening in the world is that people are sinners, flawed in their ability to think and act in ways that promote God's values and virtues. People regularly by nature make bad, self-satisfying, or outright evil decisions and reap the harmful consequences or else suffer the effects of other people's sinful choices. This can happen on the personal level (like getting lung cancer from years of smoking or being robbed) or on an impersonal, systemic level (like dying of malnutrition due to corrupt or inept policy decisions). Again, God could choose to intervene in each individual instance, but he doesn't. Rather he got to the root of the problem at the cross and will ultimately right all wrongs in the final judgment and eternal state.
(3) There is real, personal, and malevolent evil in the world. Demons do cause harm. People expose themselves to demonic activity in their sinful decisions, and Satan tries to thwart movement toward God (2 Cor. 4:3-4; 1 Pet 5:8). I doubt that, compared to the above two causes, a significant percentage of “bad things” are due to demonic activity, but it does happen nonetheless. Like the above, God has dealt with the devil at the cross and will ultimately destroy him at the return of Christ (Rev. 12:11; Rev. 20:10). In the mean time, he still roams about seeking someone to devour.
(4) Some tragedies happen as a result of God's direct judgment (e.g., Sodom and Gomorrah). Again, it seems to me the Bible indicates that this is a pretty rare occurrence.
None of the first three of these sources of suffering are a direct result of God's action. In fact, they are all a direct result of opposition to God. God can avert any of them in his power, but—and here we're left with the mystery of it in Scripture—in his wisdom he chooses not to. Rather in his ultimate sovereignty he allows these things to occur even though the cross demonstrates that he takes no delight in them. (As we prepare for Easter, it is interesting to note the dynamic interplay of God's sovereignty and human responsibility for the “evil” of the cross. On the one hand, things happen exactly as God intended in order to accomplish his purposes [e.g., Mark 10:33-34, 45; 14:18, 27, 30] and yet the players were “sinful men” [Mark 14:41; Jn 13:27] acting sinfully and with full culpability [Mark 14:21]. God's sovereignty and the free will of sinful men are not incompatible.) We might speculate as to why God allows them; perhaps, for instance, he lets us lie awhile in the bed we made for ourselves (Gal. 6:7-8). Certainly he allows some tragedies into the lives of people to cause growth (2 Cor. 12:7-9; James 1:2-4) or to get their attention or to glorify himself (John 9:1-3). He can and often does bring lots of good out of tragedy. But I wouldn't presume to think that every tragedy is allowed, much less directly caused, by God in order to achieve some direct good result for us, or at least any good that we'll ever know about this side of heaven. (The point of the story of Job is essentially that.) I think that, for the most part, God merely allows the sinful and fallen world to go along apace until the day Christ returns, and that he expects us to deal with it with the resources he left us: prayer, fellowship, the Holy Spirit. In the lives of Christians, suffering is an opportunity to learn to trust God and rely on him for strength and to bear one another's burdens. It is an opportunity to represent his values and virtues to the world, personally, politically, and socially.
Which brings up the issue of prayer. Why pray? Again, the Bible only gives us glimpses into prayer and its effects. God hears our prayers and responds to them (Prov. 15:29; John 15:16). We are exhorted “always to pray and not faint” (Luke 18:1). And yet he certainly doesn't just jump whenever we say, “Jump!” The entire Biblical witness testifies to this; God is king and sovereign, not we. Thus we pray according to his will (or for his will or in the name of Jesus; 1 John 5:14; John 15:16; Matt. 6:10); that is, though in prayer we are in effect asking God to align his will with ours, part of the actual purpose of prayer is to align our will with God's (Mark 14:36). (Obviously, prayer is more than requests and has other purposes than merely making our desires known to God, but those other areas are beside the present point. By the way, "God's will" also qualifies our "authority" in Christ to heal and cast out demons, though that is also an issue of giftedness by the Holy Spirit that I won't get into here. We can talk more later.)
So, does God just ignore our requests and do whatever he wants? No, I don't think the Bible will allow that conclusion. Though this goes beyond the biblical witness, it seems to me that prayer is something of a condescension on God's part. God condescends to consider our requests as he works out his will, and he desires to meet our requests if he can. He doesn't have to, but he allows us to interact with him in this way. I imagine God is like a parent who is in charge and whose agenda is the main thing. When a child asks a parent for something, the parent considers whether they can accomplish the agenda and still grant the request (including knowing whether granting the request will really be a loving thing to do or not). The parent wants to give good gifts to the child, but their main aim is not merely to respond to the child's every request. This analogy I think does justice to the Biblical data (e.g., when Abraham “bargains” with God in Gen 18, God's purpose is still the bottom line, though God is willing to go quite a ways towards Abe's request). When I pray, I am putting my trust in the goodness and wisdom of God (Matt. 7:11; Gen. 18:25). What makes it difficult is when God doesn't respond to simple and exemplary requests like taking away nightmares. I'm not sure why, except that, generally speaking, as stated above, he seems to have decided not to intervene in the world to avert most cases of individual suffering, presumably not because the individual nightmares of a little girl accomplishes his purposes for her but because wholesale intervention in suffering undermines his purposes for the world. Unfortunately, the Bible just doesn't tell us why. It does say that God is concerned, but he chose to act globally at the cross, not individually. Perhaps again he expects us to intervene on his behalf, granting to us the obligation to be his hands and heart. It's tough to know and accept, but that is the best I can think of right now as I ponder what I know of Scripture. I'll try to think and study some more on it for you.
I'm not sure how helpful (or new) any of the above is to you, but maybe it can get us started on a dialogue. The bottom line is, most suffering is the result of living in a fallen world and that God is concerned about it. But his concern manifested itself especially at the cross rather than frequent individual interventions. When he does chose to intervene, it is a result of his desire to love his children within the limits of his purposes, and when he doesn't chose to intervene, we must trust that he is still good and wise (á la Job). At the least, he may be granting us the opportunity and privilege to live out his power and love in our own and others' weaknesses.
Let me know if I you'd like to dialogue any further.