Das Böse ist eine Ausstrahlung des menschlichen Bewußtseins in bestimmten Übergangsstellungen. Nicht eigentlich die sinnliche Welt ist Schein, sondern ihr Böses, das allerdings für unsere Augen die sinnliche Welt bildet.
Evil is a radiation of the human consciousness in certain transitional positions. It is not actually the sensual world that is a mere appearance; what is so is the evil of it, which, admittedly, is what constitutes the sensual world in our eyes. [Kaiser/Wilkins]
Evil is an emanation of human consciousness at certain transitional points. It is not really the physical world that is illusion, but the Evil of it, which to our eyes constitutes, admittedly, the physical world. [Hofmann]
One of the tricky elements to this one is the use of sinnliche, which means the world of sense. Sensual has a sexual aspect that isn't exactly right, but physical world might be a term that makes more assumptions than are necessary. Clearly the point of the aphorism is that Evil is absolute and relative; it is in our eyes, not in things, but it is in all our eyes, it is like an inevitable aspect of human-all-too-human thinking.