Oh boy, called out to rant about writing. My favorite subject 
So, how do you figure out this is the villain?
There are really two things we are talking about here. The first one is what I’d like to call “the malign/evil”. This is the distant evil, think Sauron rather than Saruman. Their morals are opposed to the reader, they symbolize everything that is bad in the world. You never really get to interact with them, and they tend to be a figurehead more than anything else. This is where the term “evil” can easily be used. Often they can be systems rather than persons. Skynet, not the Terminator. But that’s not what we’re talking about here I think.
So instead, let’s talk Antagonist! This is the villain that is standing in your protagonist’s way, and that is the way I define them. While the protagonist in FH calls themselves the villain, in fact, the true antagonist of the story is Ortega. In my view, villain and hero are two sides of the same coin, and the hero acts in accordance with society’s rules, while the villain does not.
As you can see from this, there is a thin line between villain/antagonist/rival, and you can’t really define it in neat boxes. Do you even need a proper villain? Who knows, but the protagonist most likely has someone they curse about when drunk, and that’s probably the one you need to focus on writing well.
What makes them the villain?
I’ve already gone into it a bit. The big one is that they are opposed to the protagonist. The second one is that they break some major societal taboos. This can be killing, being sexually “deviant” (gaycoded villains was/is so common), stealing, kicking puppets and so on as you say. HOWEVER… this has a problem, which we’ll get to in next point.
Oh no, we now love the villian.
Remember the thing I said above about breaking societal taboos? This will inevitably lead to people starting liking the villain, maybe more than the actual protagonist of the piece. The thing is, a lot of people are not too fond of society’s rules. Killing might be excused, even embraced if the villain does it to people the audience feels deserve it. Or, in service of a cause that people can empathize with. This is what happened to Magneto, once people got to know more about the background and causes, the whole “evil mutant” thing became more understandable. Striking back. Living in peace is dangerous, would you trust the people who nearly exterminated your people once?
Villains are often outcasts, which means they will be embraced by people who also see themselves as outcasts. Misunderstood. Rule breakers. Not fitting in. Of course we’d root for the villain! We are sitting here reading books, we’re not the popular hero. If there is something people can latch onto in a well-written villain, they will do so.
If you get to this point, GREAT! There is nothing better than having a sympathetic or understandable villain, because that complicates everything. However, it is important to remember that there was a reason why they were the villain/antagonist in the first place. Maybe the reader/protagonist sympathizes, but they still need to stop the death ray. There might be understanding, attraction, maybe even admiration, but they still have opposed goals.
When a villain/antagonist starts to slide towards the sympathetic side of the spectrum, often a new evil is brought in so they can team up with the hero against it. A character can, like Magneto, slide along the spectrum from villain to antagonist to rival to ally.
Of course this might mean the writer might have to handwave/forget/explain some choice atrocities in the villain past if they need it to be permament and uncomplicated. Mind control/madness/impersonators/rebirth are some classics that has been used. Both magneto, and especially Jean Grey/Dark Phoneix is a classic in trying to bend the history to suit the current story. Same with rehabilitating Emma Frost.
If you want a villain to remain a true villain, even if they might have understandable reasons, you often need to go petty evil. Yeah, it sounds weird, but that’s how you turn characters actively unlikable. Have the villain shoot someone’s dog. Kick a puppy. Be a coward. Set someone up and betray them. Abuse their loyal retainers. In the past, “sexual deviancy” ticked this box as well, but oh boy did it backfire. Now they go weird, like with the Homelander breast milk stuff. The petty, cowardly, mundane evil is something people rarely can forgive, because it’s so close to the enemies in their real lives. Genocide is thankfully abstract to most people, while animal abuse is not.
Having more than one villain in the story?
Sure! Why not? The more the merrier. Just remember that like with any member of the cast, the more you add, the less depth you can give them. If your villain turns more antagonist/rival, then by all means add a bigger threat and dig into and enjoy your resulting grey morality.
How do you disconnect when you connect so deeply to the point that you self insert to the point you can see the world…through your character eyes?
I assume we are talking about the main character here. I tend to think about major characters as if I am writing the story from their side. This makes it hard to switch gears at times, and I often have problems jumping from one part of the story to another because I have gotten stuck in a perspective. But it also helps me writing them as side characters. I have like 7 characters apart from the protagonist in FH that could have been the main character of the story. It would have been different, but still cool.
But that’s not really what you’re talking about here I think. It sounds like you have written a villain that is so disgusting and horrible to you that you just don’t want to deal with them. And thus, that stops the story.
Here is the thing. You are a writer. You shouldn’t disconnect. Your feelings are what’s important here, that pain, frustration and anger is what gives rise to good stories. I can’t give you an answer here, but I will pose some questions to you instead:
1: It is an old story. Is it possible that you have simply outgrown it? It might not be the self insert that’s the problem, it might be that it’s stuck in a past you don’t want to deal with anymore? Maybe it’s better to just put that story back in the drawer and work on something new? You still learned what you learned when writing it, it’s not wasted. Go forward and make new mistakes instead! And, if the core idea sticks, maybe you can return and write it from scratch in a decade’s time and it will wiork better.
2: Is it the villain you hate? Or is it the fact that the villain is challenging you? Or rather, someone who is close to you? Is it because it is too painful to step inside the head of someone who hates/works against your main character? This can be both tricky and painful. Getting inside the head of a villain that truly are at odds with your own morality can be disconcerting. It takes practice.
3: Might it be that you were really interested in writing about your protagonist and the villain was just an afterthought you added because you felt the story needed one? Maybe the problem is that you are trying to stick to a form that the story might not even fit? You might not need that villain. Maybe it’s better to just shuffle them off into the distance like the eye of Sauron and don’t dwell on them. Let them be evil cardboard. Maybe the real antagonist is someone else. Or something else. Is there another character you have? Maybe a rival? Or a competetive ally? Focusing on that tension might make a better story than having a villain there just to tick a box.
If your subconscious is telling you you don’t want to fix it, listen. But first try to figure out what the real problems is. Most of the editing issues people run into is that they think too small. Better words. Smoother grammar. While in reality it might mean chopping up your novel in pieces and rearranging them, skipping the first half and starting in the middle, adding three extra chapters to make transition smoother and so on. Editing is brutal.
Then I don’t see them as character but rather as a force of nature and these can be fun too.
