Ok, here are some shots so you can get a visual idea of my problem.
The first is head on. Pretty standard, no definition torso.
Then, side on, perhaps bad posture?
Then when i hate it the most, bending over (i see the reflection in my bathroom mirror when i'm washing my hair over the bathtub, saggy belly.
One of the reasons that I ask guys to post pictures in threads like this is because of a very common phenomenon- we always see our "problem" area but it's harder to see the big picture.
Your belly is fine. Actually, it's better than fine- you're naturally much leaner that the average guy in your age group.
No one over the age of 15 looks good when they lean forward in front of a mirror.
No one. That's why we shave in those little mirrors- so we don't see ourselves leaning forward over the sink.
The challenge that you have is very common: proportions. There's at least two other threads on the forum from guys who started out with the idea that there was something wrong with their waist/hips when in fact, their waist/hips were pretty much average but their weak area was shoulder/back.
There are two things that compose a V-tapered body- broad shoulders and a slim waist. You have the slim waist. The next step would be to work on your upper arms (deltoids), chest (pecs) and upper back (lats and traps) to bring things into proportion to more of a V-taper.
What you're perceiving in the side shot as a "belly" is actually two things-
- You have a natural S-curve to your spine. This is why you have a nice butt for a slim guy. That curve in your lower back helps avoid that flat ass that a lot of white guys have. The trade-off is that the curve makes you have the opposite-direction curve at your belly button. You can do a bit of toning to flatten the musculature there but honestly- a cute butt is going to get you more attention than a flat stomach.

- Look at the side image and try to imagine what it would look like with about 1/2 inch more chest (pectoral) muscles. It would be pretty good- your eyes would be drawn more to the chest probably. And this is what we mean about proportion. You're focusing on the waistline (which is pretty much normal) and not realizing that by working on developing your chest muscles, you would bring things back into proportion which would make for a very nice (and hot) body.
To the original question that you had about the "fat on my stomach". You actually have less fat that the average guy your age. This is evident by the fact that you have no fat over your lateral hip ("love handles"). If you want a bit more definition in your abs, then continue the ab exercises you're doing and cut back a bit on carbohydrates.
The milk you're drinking is a good source of protein. You might think a bit about the amount. Milk does have a bit of carbohydrate that in moderate amounts, isn't an issue. But 2 liters of milk is about 100 grams of carb- that's around 400 kcals- about the same amount as 3 Snickers bars (Snickers is about 33 gms of sugar). You might trim the amount of milk down to about half that and instead drink water.
It's very difficult to "rethink" body image. Human nature is to see some things (particularly what we perceive as our "weak areas") but not see how all the parts fit together. You're not fat at all. In fact, most guys would kill to have your body (either as a trade or just to play around with for a few hours). Clothes are trending slim these days and a slim guy looks incredible in slacks or a suit. Most of what you're perceiving as your problem area (your waist) is actually one of your stronger areas. If it bothers you, compensate by doing some toning in your upper arm, chest and upper back which will give you more of a V-taper and make you look even better in clothes (and out of clothes, for that matter).