any character arc is the internal flaw
I don't agree with you. Characters can develop by acquiring new qualities, rather than getting rid of old ones. There are also a bunch of stories where the characters learn to live with their "internal flaw" or indulge it. It's all very individual. And it's still considered a development. You do not have to "fix" everything to make the character more developed and interesting. Good deeds adhere to morality, evil deeds are mostly immoral. There is a big difference between catching flies for the sake of selfishness and for the sake of helping others.
Also, chaotic evil should be "stupid" according to your concepts, because in most cases it is classified as a "monster" who just likes to destroy everything. Again, chaotic evil doesn't need a good reason to kill someone or destroy something. Many chaotic characters kill for fun (or they're really monsters), and not because of an order (lawful evil) or for benefit (neutral evil).
If a character is "stupid evil", then they are by definition flawed. Like Mr Moneybags for example -- a character who's too stupid to realise that murder is not the only way to get rich. If Minthara is doing something stupid then that's a huge opportunity for a character arc.
As someone has already said, killing can be the easiest and most profitable way to get rich, so your "mister" may not be such a "stupid evil", he just likes simple ways.
Alignment isn't a big thing in BG3, and seems to be getting phased out of D&D in general.
Also sad for me, because it implies a change in the characters ' worldview, which I don't approve of. I believe that a character can develop in the direction of their mores, views and tastes. Let it make him mad or maliciously great.
A character arc doesn't always mean "become nicer". Sometimes it can be the opposite. Many stories have been told where the climax is the protagonist learning to "love themself more" or "fight back against the bully" or whatever.
We are talking about evil characters, in this case, writers often resort to the "arch of redemption" method, which makes them "become nicer". Cuz for evil "love themself more" means becoming even more selfish. My point is that these examples are not suitable for evil characters, you understand that such endings happen to heroes.
Evil characters can become even more evil, can be obsessed with revenge, want to become great, and they can gloat over and over again, becoming more ignorant. The big problem is that we don't have many stories about evil in evil way, where evil didn't fall or change for good way. Especially in games.
And this is not because it is a "bad way", it's just that we constantly talk about heroes and encourage morality. Even in stories about maniacs, the detective most often wins, although life is full of stories when the killer was not found and he did not get what he deserved.