Is there a psychological condition which promotes literal and overly complicated thinking?
Yes, I think so... Its called intelligence.
Is this a known condition?
You want a literal answer? Then "Yes"
What, neurologically, may cause this in the brain?
Something amiss in the corpus callosum
Are there ways to improve this?
If you can teach an engineer to write original music, then maybe so.
This question reminds me of the "Professional Test" where the first question is: How do you put a giraffe into a refrigerator?
The claim at the end of the test is: "according to the statistics of Andersen Consulting Worldwide, around 90% of the professionals failed the exam. (But most preschoolers got it correct which disproves the theory that most "professionals" have the brains of a four year old :)". Hence the popularity of this test.
I first saw this test over 10yrs ago and have been trying not to overcomplicate things ever since, to little avail however. About 7yrs ago I moved into an apartment and wanted to move the landline phone closer to my pc. So I'm planning how to run the wire up and down walls and across the floor when my friend said "Why don't you buy a $10 cordless phone from walmart and put it where ever you want? Sheesh!". You know I couldn't make this up! No seriously, I really couldn't make this up. I'm way too logical and literal to be that creative. So, am I stupid? Retarded? Autistic? Nah, I'm just a guy. A straight guy and I'm right-handed.
Want to guess the sex of the friend who suggested the cordless phone? Oh and she is straight too.
If you need someone to point out the obvious, find a straight gal or gay man.
Now I'm not saying that a condition can't be made of behavior more extreme than is displayed by your typical guy, and given a name like autism or something else, but it seems to me to be mainly varying degrees of communication between areas of the brain, coupled with overall intelligence, that determine how complicated or simplistic a solution will be.
We all have our areas where we excel. Some folks do well in the arts. My excellence happens to be overcomplicating things and doing extremely well with complicated, boring, mundane problems that would send any artsy person straight to the rubber room. Its ironic how I simplified this one, however. So maybe that's evidence the condition can be improved. ;) Now I'm going to go write a symphony... just as soon as I finish designing this bridge.
In case you missed it, larger corpus callosum is associated with left-handed people, musicians, artists, gay men, and straight women. Tendencies to miss simple solutions and to overcomplicate are associated with right-handed, logical, and engineering types (the antithesis of lefties, musicians, and most engineers are men, etc). Therefore, smaller corpus callosum is associated with overcomplication. That seems simple enough.
Note: Some have a tendency to skim over hyperlinks, I do it too, however these hyperlinks are informative and/or very funny and are essential to understanding my claim.
Another note: Some research has indicated that its not the size of the corpus callosum that matters, just how "connected" it is. For the sake of simplicity in my answer, I used the words "large" and "small".