Q: Does the mind create the body?
A: The answer depends on what you mean by “the body”.
If “the body” in the question means “the body as we perceive it”, the answer is “yes”. And, not only is the body in this sense is created by the mind, everything else in this world, the universe, and the reality as you perceive them are also created by the mind.[1,2]
Yes, and yes
The answer to your first question (I've re-worded it a bit)...
is the outside world, such as the image of other people, a reconstruction of the collection of sensory inputs that are processed and merged in the brain?
...is simply and straightforwardly a 'yes'. Sensations picked up in the periphery are collected and ...