I think or I am thinking

You have to distinguish the different meanings (or uses) of the verb “think”.

If you’re using it to express an opinion, it’s (usually) a verb of state and can’t be used in the progressive. This is the case in your example:

– I think she’s crazy

= My opinion is that she is crazy.

If it expresses a decision, it’s also a verb of state:

– I think I’ll have another cup of tea.

= [Decision to put the kettle on]

If it means “reflect”, then it’s not a verb of state:

– Can you turn the radio down? I’m thinking about my homework.

– I haven’t decided if you can borrow my car yet. I’m still thinking about it.

If it means “consider”, then it’s not a verb of state (as in Panj’s example):

– I’m thinking of going to Italy for my holidays – again.

– I’m thinking of shaving my hair off.

I’m sure there are other meanings that could be categorised, and there is a growing tendency to use the opinion version of think in the progressive that confuses matters (eg: “I’m thinking he’s an idiot. What about you?” whispered to a colleague during a PowerPoint presentation by the new boss), but as a general guide if you can replace “think” by “reflect” or “consider”, you can use the progressive form, and if you can’t, then you can’t.