I believe that President Reagan was reacting to the sentiments of the American people when he made this statement. To understand President Reagan's statement, one must understand the fears and apprehensions of the American people during the Cold War. Communism had been portrayed as a Godless ogre which was antithetical to everything America stood for. The greatest reaction, of course, was during the 1950's when "In God We Trust" was added to the American currency and "under God" was added to the pledge of allegiance. The fear of a Communist takeover was still alive during Mr. Reagan's presidency, although not as pronounced as it had been thirty years earlier.
At the time of the Reagan presidency, the Soviet Union was still considered the chief villain in the cold war. I do not agree that it was an evil force, although many of its rulers were quite evil. Communism was an economic system which was unworkable and which quickly devolved into dictatorships. When one considers the Cold War fears of the American people and the arms race which accompanied it, one can see why President Reagan called the Soviet Union the "focus of Evil." Was his statement correct? Probably not. Did it echo the feelings of most Americans? Indeed it did.
I do believe that the Soviet Union's political and economic system was immoral and, you can argue, evil. To that extent, I would agree with President Reagan. However, I would not agree that the Soviet Union was responsible for all of the evil in the world: that it was the focus of evil in the modern world.
The Soviet system was clearly evil. It took away the rights of its people to live their lives as they wanted. It did not allow its people either economic freedom or freedom of expression. If you believe that these sorts of freedom are universal human rights, then this was an evil system.
However, there were many evils that were as great as communism. Just to name one, the hunger for power is as great an evil. It led to terrible regimes like that of Hitler in Germany or that of Idi Amin in Uganda. Nationalism is another, leading to things like apartheid. So is religious hatred, leading to things like the "troubles" of Northern Ireland and the terrorism we now face.
So, I would argue that communism is evil, but it is not the worst evil in the world.