When you are thinking too much and creating situations that will never happen when solving a problem, is there an expression or word for this? What is a better way to express this idea without using "thinking too much" or is this fine?
The word is "overthinking".
Overthink—to think too much about (something); to put too much time into thinking about or analyzing (something) in a way that is more harmful than helpful
exaggerating things would be one option. Also, many of the OVER- verbs would also do the job. I personally like overdramatize because it reminds me of the funny expression "to be a drama queen". Other idiomatic expressions you might like are
make a big deal
press the panic button
blow things out of proportion
You can use the world overthink.
Overthink (verb): to think about something too much, in a way that is not useful: Eg: I overthink everything and worry too much.
You can also use the sentence "think too much" to express the same thing.