Entropy is a tricky thing to get right...e.g. start with the various discussion on this list...
You have the basic idea, save that the sun is an energy INput to the earth. The total entropy in a closed system will always increase, but it may not be evenly distributed so there could be pockets of higher and lower entropy even then. In an open system that is absorbing energy, like the earth, the increase could be "passed-off" to the outside somehow. If you expanded your boundary to include the entire solar system you could treat it as "closed" and see a total entropy increase over time.
The argument linking life and evolution to decreasing entropy centers around thinking of low entropy as more "organized" -- that a low entropy system has fewer states that it can occupy compared to all the states in the universe. In this sense life is anti-entropic, but remember it is also a local phenomenon. Eventually we will all have to pay the piper.
For a more intelligent answer than I can provide, look into the links between thermodynamics, statistical mechanics, and information theory.