That doesn't really solve the problem because the simulation is (apparently) big enough to allow life to evolve. Why couldn't life evolve multiple times in a simulation?

Isn't the argument about simulation more about pondering the question "what is the fundamental nature of reality?", not "why is there life?". If you say that some beings are interfering with our simulation (either designing life, or preventing other life, etc...), that is just another word for god.