Is there a psychological condition which promotes literal and overly complicated thinking? Quote from Sheldon Cooper, Big Bang Theory IMDB


  Leonard: You convinced me. Maybe tonight we should sneak in and
  shampoo her carpet.
  Sheldon: You don't think that crosses the line?
  Leonard: Yes... For God's sake, Sheldon, do I have to... hold up a
  sarcasm sign every time I open my mouth?
  Sheldon: You have a sarcasm
  sign?


Some people tend to think very literally and also over-complicate things.

This causes much misunderstanding when communicating with people, especially with the advent of texting, email and social networking, as the verbal and nonverbal cues are absent.

It sometimes causes difficulty when completing tasks, as those with this condition can misinterpret what is required of them. This can be an asset academically. A  "misinterpretation" (or better put, a different interpretation) in one way, will, usually mean there is a gain in another aspect. 

When someone truly does not understand something, others might think that person is  joking. Others may not understand their humor, as he/she will make a joke about something, he/she sees as obvious and will be taken seriously by others.

Another way to describe this "condition" is to use the example of sudokus and cryptic crosswords. Someone might make mistakes in the easy ones, and find the more difficult ones easier to solve, looking for a more complicated solution than the one that was there and already apparent.  To solve complex problems is, often, easier than the straightforward and simple.


Is this a known condition? 
What, neurologically, may cause this in the brain?  
Could this be some form of "retardation"?   
Are there ways to improve this?
Literal thinking can be associated with circumstantial thinking, and could be the result of thought 1 or communication disorders:


  Circumstantial thinking
   A type of thought disorder in which each of a series of thoughts seems
   less closely related to the original thought than the one before it at
   first, but the patient's thoughts eventually return to the original
   subject. 


Circumstantial thinking can be a symptom of autism, some schizophrenia and schizotypal affects.

The assumption can be made that verbal skills are a prerequisite for effective communication. (without discussion of the mute or deaf)

Metaphorical intelligence is inversely linked to literal thinking.


  that the ability to process metaphors functions as a relatively stable
  individual differences variable, and that those who are “less able” to
  process metaphors can be said to have a more “literal” thinking style.
  ... 
  Frozen metaphors are those that are in common use in the language and
  which are often thought to be treated as single linguistic units by
  native speakers. Novel metaphors are ones in which ideas are combined
  in new or unusual ways.


Logical thinking is not linked to creative thinking. Creative thinking is linked with metaphorical thinking.


  Divergent (as opposed to “convergent”) thinking is a relatively old
  concept, proposed by Guilford (1967). He described the convergent
  thinker as a person who finds it easy to deal with problems requiring
  one conventional correct answer, clearly obtainable from the
  information provided. The divergent thinker, on the other hand, is
  better able to solve problems requiring the generation of several
  equally acceptable answers where the emphasis is on the quantity,
  variety and originality of responses. Those who engage more readily in
  divergent thinking are more likely to display metaphoric intelligence. 2
  
  Creative thinking (divergent thinking) and critical thinking
  (convergent thinking) are two powerful aspects of effective thinking  3


A photographic or eidetic memory,  is often associated with high intelligence or savant intelligence.
There is evidence that suggests that the creation of photographic or eidetic memories is impaired by concurrent verbalisation.   An interesting point that the mental processes involving this talent are not only independent from verbal skills, but, potentially, hindered by such. One thing it does reveal, is that verbal skills are not linked to this type of "genius".


  Research has shown that if a person verbalizes during the time he or
  she is scanning the original picture, this interferes with eidetic
  image formation.


The same features of simultaneous brilliance with impaired social skills and varying cognitive impairments, are observed with "savants".  4

I think a better question would be, what processes cause literal thinkers, who may be highly intelligent in some ways; to frequently over complicate or misinterpret, seemingly, simple concepts?

Literal and over complicated thinking can be linked with a logical thinker, who lacks creative thought skills. Some of the complications could be the result of interpreting problems literally and missing metaphorical meanings.

1. The Confusing Area of Disturbed Thinking 
Journal of Personality Assessment
Volume 40, Issue 5, 1976 
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DOI:10.1207/s15327752jpa4005_5
Bert Loro
2. Dr. Jeannette Littlemore
English for International Students Unit
University of Birmingham
Birmingham
B15 2TT
U.K.
3. Critical Thinking and the Art of Learning and Living
John F. Kennedy
4.  Is there such a thing as a photographic memory? And if so, can it be learned?
Alan Searleman,
Professor of psychology
St. Lawrence University