Praise be to Allah, and may peace and blessings be upon the Messenger of Allah. To proceed:
Yes, everything that occurs in the universe occurs by the will and universal, decreeing will of Allah, and nothing lies outside His dominion and decree. However, it is necessary to distinguish between the universal, decreeing will and the legislative, religious will, because confusing the two leads to many misunderstandings.
The universal, decreeing will is the will from which nothing can escape. Whatever Allah wills to occur does occur, whether it is something He loves or something He does not love according to His law, such as the faith of the believer, the disbelief of the disbeliever, the obedience of the obedient person, and the disobedience of the sinner. Allah, the Most High, says:
﴿And when Allah wills harm for a people, there is no repelling it.﴾ [Ar-Ra'd: 11].
As for the legislative, religious will, it refers to what Allah loves, is pleased with, and commands, such as faith, obedience, and repentance. Allah, the Most High, says:
﴿And Allah wants to accept your repentance.﴾ [An-Nisa': 27].
The universal will encompasses what Allah loves and what He does not love, whereas the legislative will concerns only what He loves and is pleased with.
The universal will must take place. Whatever Allah wills to occur will occur. As for the legislative will, it may or may not take place. Allah has commanded all people to believe, yet not all people are believers.
The universal will is related to Allah's lordship, creation, and decree, whereas the legislative will is related to His divinity, law, and commands.
The two wills may come together in an act of obedience. Prayer, for example, is beloved to Allah and commanded by Him according to His law, and when it occurs, it occurs by His universal will.
The universal will may occur alone in the case of sin and disbelief. Both occur by Allah's universal will, but they are not beloved to Him nor are they approved by Him according to His law.
The legislative will may occur alone in a command that is not fulfilled, such as the disbelief of a disbeliever whom Allah has commanded to believe and whose faith He loves, but who does not believe.
Therefore, not everything that Allah wills to occur according to His universal will is necessarily beloved to Him according to His law, just as everything He loves and commands according to His law does not necessarily occur among all His servants.
The occurrence of evil does not mean that Allah loves or approves of it. Rather, it occurs by His universal will for a profound wisdom, and great benefits and wisdom may result from it. A sin may become a cause for a servant to repent, seek forgiveness, struggle against his own desires, or for the manifestations of justice, mercy, and wisdom to become apparent, along with other matters known to Allah, the Most High.
Allah, Glorified and Exalted is He, does not do anything without purpose. Rather, all His actions are founded upon wisdom and justice, even if the details of His wisdom in some matters remain hidden from us.
It is obligatory for us to believe that Allah, the Most High, is Wise in whatever He decrees. Our lack of knowledge of the detailed wisdom behind something does not mean that there is no wisdom in it. Nor is it permissible to regard the occurrence of evil as evidence that something can occur within Allah's dominion without His will, for this contradicts the perfection of His lordship and power.
Thus, the servant should look at the actions of people from two perspectives: the perspective of divine decree and will, and the perspective of divine law and love. Whatever occurs has been willed by Allah in the universal sense, while whatever He loves and commands is willed by Him in the legislative sense. In this way, the apparent difficulty is resolved.
And Allah, the Most High, knows best.