Isaiah 45:7 (KJ21) 7 I form the light, and create darkness; I make peace, and create evil; I, the Lord, do all these things. Other versions tend to use words such as 'Calamity'.?
The word translated "evil" or "calamity" in Is 45:7, can (not surprisingly) mean either "evil" or "calamity". HALOT's main definitions: Of little worth, poor, not beneficial, contemptible, reprobate, malicious, injurious, evil, sinister, bringing misfortune, badly depised, ill-deposed, heavy, sullen. For "destruction", see Ez 14:21; for "evil" see Deut 17:5. Context must determine its precise meaning:
The verses before v7 show that God can create calamity. The verse after v8 emphasizes his righteousness. Thus, since the context emphasizes that God can cause calamity, and denies that God creates evil (in the moral sense), the correct translation is certainly "calamity" and not "evil".
So, רע is parallel to darkness and in opposition to peace. Both of the meanings you cite are within the range of the word. 'Evil' is closer to a plain sense, but, based on context, many kinds of badness are read. The 'calamity' notion might come from two ideas:
That word occupies about 6 columns of HALOT; it's not quite like reading the OED entry for 'dog', but it's up there. In other words, it is used a great deal across the whole range of the text, in many different contents. The result is that any translator can choose from a wide variety of nuances based on her or his intentions and options. I didn't spot a citation to this particular verse in any of the definitions on HALOT, but I don't have the luxury of a computerized copy with a search option.
I think it is absolutely wrong to translate רע as "calamity." From the context, and the context of similar verses, Isaiah is clearly stating that God is the Creator of ALL things, both good and evil, but it is more specifically a statement to Cyrus that God will cause darkness and evil upon the Babylonians who Cyrus will defeat.
The chapter begins "...כֹֹׁה אָמַר יהוה לִמְׁשִיחוֹ לְכוֹרֶשׁ"ׁ("So said the Lord to His anointed one, to Cyrus...") "...לְרֵד לְפָנָיו גוֹיִם..." ("...to flatten the nations before him..."). God then promises Cyrus that He will go before him to make the war easier, and Cyrus, moreover, will be rewarded with riches stashed by the enemies in hidded places that God will help him find. And God tells Cyrus that he is to fight this war for the benefit of Israel "my chosen one", which indicates that Cyrus is to destroy the Babylonians who had exiled the Jewish people. See Rashi to v. 4.
But then God goes on in verses 5-7 to explain that He is Hashem [the Holy Name], "and there is no other; besides Me there is no God".
In verse 7 -- the focus of the question -- continuing the thought from verse 6, God says He is the Lord God, there being no other god, "יוֹצֵר אוֹר" "who makes light" (Rashi says, "for the righteous"), "וּבוֹרֵא חֹשֶׁךְ" "and who creates darkness" (Rashi: for the Babylonians); "עֹשֶׂה שָׁלוֹם" "who makes peace," "וּבוֹרֵא רָע" "and creates evil" (Rashi: for the Babylonians). As noted in the parantheticals, Rashi clearly indicates from context that God fully intends to bring darkness and evil on the Babylonians to help Cyrus help the Israelites.
But if we compare the use of the word רע where God is talking about good and evil, as He is in Isaiah 45:7, we find that רע must mean "evil."
At Deut. 30:11-20, Moses summarizes the basic expectations God has for the Jewish people. He explains that the totality of the commandments, all of which were being retaught on that day, "are not too difficult for you" and require, basically that each Jew attempt to love God, "walk in His ways," keep his "commandments, statutes and ordinances," and thereby live. The alternative is "death" although according to rabbinic tradition, "death" here means denial of eternal life after death. So Moses expalins God's message: "See, I have set before thee this day life and good and death and evil ("רְאֵה נָתַתִי לְפָנֶיךָ הַיוֹם אֶת הַחַיִים ואֶת הַטוֹב וְאֶת הַמָוֶת וְאֶת הָרָע"), and at verse 19 we are advised that of these choices, we should choose "life."
Rashi explains, at verse 15, that God put good and evil in the World because they are interdependent: "if you do good, you will be granted life, while if you do evil, you will receive death." And, by saying "you shall choose life," Rashi explains that God is "saying that 'even though you have free choice, nevertheless, I instruct you to choose the portion of life.' It is like a man who says to his son, 'Choose for yourself a fine portion of my estate,' and then directs him to the best portion, saying to him, 'This is the portion which you should choose for yourself!' And regarding this, the verse says 'The Lord is my alloted portion and my cup; You guide my destiny' (Psalm 16:5)." Or in other words, "You laid my hand upon the good lot saying, 'Take this for yourself.'"
Those who would say that רע refers to "calamity" are reluctant to say "evil" because they do not associate God with doing evil. But the fact is, many things in this world are evil depending upon one's perspective. What is good for the butcher is evil to the cow. As Rabbi Benjamin Blech notes in his book, "If God is Good, Why Is The World So Bad?" (Simcha Press, 2003), the greatest good, from God's point of view, is that His children should make correct choices with their gift of free will, and to achieve that good, God had to introduce evil.