"As many people have noted throughout the years though, Disney has been rather...lax when it comes to adapting books and fairy tales into movies. This is understandable in some cases. Still, it can be a bit galling when one knows that the fire-breathing, demonic witch on the screen was a kindly old lady in the source material."
Sonic The Comic Online does this with many games characters. Shadow, Rouge, the Babylon Rogues, Bean, Silver... even Cream the Rabbit! Blaze is immune to this, being almost identical to her game counterpart.
While Discord in canon was certainly malicious and powerful, he was presented more along the lines of a misbehaved brat than anything else and he did ultimately have a Heel-Face Turn. However, many fan stories (most prominently the Pony POV Series and The Nuptialverse) present him as an unrepentant Ultimate Evil. (This is somewhat more justified for fanfics that were written before "Keep Calm And Flutter On" and the character development Discord got in that episode; more modern works have less of an excuse.)
Damion, a one-shot character from Pokémon, was originally just a Jerkass becomes a dangerous psychopath in Symbiosis. He is willing to kill Ash to get revenge on Brock and Misty for reporting his crime.
In the Simpsons AU The Fourth Simpson Child, Lisa gets this treatment, going from a socially isolated smart girl who is somewhat The Unfavourite to a Smug Snake who is openly jealous of Samantha (her older sister and the titular character).
In Touhou, Wriggle is just a run-of-the-mill insect youkai and, while still dangerous, she usually has no malicious intentions against humans and will attack only if provoked. In the fanfic No Such Thing as Fairy Tales, Wriggle is a fae, who spirits aways humans and torture and rape them for no other reason because she can. An Eldritch Abomination.
Touhou Ibunshu does this to almost half of the cast. Rumia, Mystia, and Remilia are Creepy Children that eat people, Cirno, Wriggle and Hina are sadists that try to kill people for no reason, Sakuya is a Serial Killer and succeeds in killing the humans, and Yukari and Mokou both try to obliterate Gensokyo. Strangely, the ones that get some Character Development end up being more sympathetic than the originals, even if they are worse people overall.
Imperfect Metamorphosis takes Yuuka Kazami (a powerful and dangerous individual who nonetheless mostly leaves people alone) and turns her into The Dreaded who makes every character crap their pants whenever she's mentioned, and more than lives up to her reputation by being a full-blown Outer God.
In the original story of Saint George and the Dragon and most reworkings of it, Saint George is the hero. For example, in The Reluctant Dragon, he becomes the title character's friend. In the Dragon Keepers series by Kate Kilmo, Saint George is a Villain with Good Publicity who enslaves magical creatures and drinks dragons' blood while the princess he saved is an evil witch. The dragon from the original tale tells his own side of the story, in which he was a benevolent sorcerer betrayed and killed by George.
Myth-O-Mania has some in-universe examples: When Zeus rewrote the stories of Classical Mythology, he exaggerated monsters' scariness to glorify the heroes. (eg, The Minotaur went from being a vegetarian to eating humans.) Plus, Zeus claimed that Hades kidnapped Persephone, when actually she hitched a ride on his chariot while running away from her overprotective mother.
The mice from The Hitchhiker's Guide to the Galaxy - In the radio play, they are fairly amiable, and upon discovering that Arthur is in the ideal position to find the ultimate question, offer to make him "a reasonably rich man" if he does. In the book and subsequent adaptations, however, they are much more sinister, plotting to steal his brain in order to read the question from it.
In Alice's Adventures in Wonderland, the Queen of Hearts is clearly a mean woman and a Jerkass type, but calling her evil might be stretching the definition a little. Nonetheless, you can be sure in almost any modern story where Lewis Carroll's heroine is portrayed as the protagonist, the Queen of Hearts (or an Expy of her) will be the villain, and portrayed as far more evil than Carroll could have ever imagined.
The Jabberwock is often both this and an Ascended Extra in such works, seeing as the beast barely even counted as a character in Through the Looking Glass, only briefly appearing in the now-famous poem that Alice read. The poem became so popular that most modern works include the creature as an adversary for Alice and the heroes in general.
In the picture book The Butterfly Ball, Sir Maximus Mouse, the cheese tycoon, is simply a workaholic who's too busy to go to the Ball. In Roger Glover's concept album adaptation, he's a borderline-demonic Corrupt Corporate Executive.
Aside from a fight when she premiered in one issue of the Comic Book, the Black Widow has never been a Spider-Man villain. Yet Gottlieb's The Amazing Spider-Man pinball has her on the backglass along with Spidey's other rogues, such as the Vulture and the Green Goblin.
In Zen Studios' Spider-Man pinball, J. Jonah Jameson is elevated from an annoying nuisance to one of four villains for Spider-Man to fight.
The Wizard in The Wonderful Wizard of Oz, although he becomes one of Dorothy's friends, isn't nice in his early appearances (after all, he did have Ozma kidnapped to prevent her from interfering with his takeover of Oz). However, in the Perspective FlipWicked and its musical adaptation, he is much worse. The musical version, though, is more sympathetic than the book version, who doesn't shy from personally murdering the Ozma Regent, violently suppressing Animal protesters, and attempting to exterminate the Quadlings just to get at the rubies on their land. In the musical, he's a sort of a Well-Intentioned Extremist who is puppeteered by Madame Morrible and generally seems to want the best for Oz, as long as he remains its leader.
This happens to several characters in Love Never Dies, the sequel to The Phantom of the Opera. The trope applies in two ways, both because characters from the first musical undergo villain transformations and because in The Phantom of Manhattan (the Frederick Forsyth novel that was the result of early work on what became this show) contains no such transformation, instead having the villain be a completely new character who didn't make it to the stage.
In Wonderland: Alice's New Musical Adventure, the Mad Hatter becomes female and the play's main antagonist, with the March Hare as her Dragon. In the book, he's scatterbrained, but not particularly malicious about it.
When it comes to other characters, the extras actually contain a spectacular Inversion. One strip features a man who stuffs minus in a briefcase after luring her in with promise of sidewalk chalk, and who would certainly have tried to abduct her if he wasn't stopped. His counterpart in the extras, on the other hand, is an innocent bystander who doesn't do anything to deserve being antagonized by the villainized minus.
This page lists five well-known characters who were reimagined into villains through Disney movies in this way.
The Day Of The Barney Trilogy takes Barney and Baby Bop, who are portrayed as sincere and good friends to the kids on Barney & Friends, and portrays them as villains who successfully get the world's children to kill any adult they come across, kill their male Special Friends when they turn thirteen, and take the thirteen year old girls away to fatally mother mutated offspring. They're even revealed to be Really 65 Million Years Old and to have been the harbringers of many of the world's evil dictators and catastrophes.
Hilariously, the Lighter and Softer version of the game Warhammer 40,000, Brighthammer 40000, does this to the Tau Empire. To explain, Warhammer 40000 is an extremelygrimdark setting, with a number of genocidal, xenocidal and one or two omnicidal factions locked in a Forever War. The sole exception is the Tau, who are still bad in a sense but still the most sane and sympathetic of all factions. For Brighthammer 40000, every faction except the Tau have been made more sympathetic, while the sinister aspects of the Tau have been played Up to Eleven, along with some new ones added. This has the effect of turning the Tau into the setting's Big Bad. Water Caste Tau are all conniving schemers and cheating merchants, Air Caste Tau are all cowards who launch unprovoked bombing runs and orbital strikes on defenceless worlds, Fire Caste Tau are all violent brutes who bully other Tau and use prisoners of war for target practice (when they bother to take prisoners at all), and the Ethereals run the empire as this horrible 1984-esque society and often use mind-control to order Tau to kill themselves, sometimes for fun. Only the Earth Caste escape this treatment, being poor schmucks who are abused, exploited and left to die when they're no longer useful.