I've read that a fully charged 18V li-ion battery is over 18V when fully charged. Is this true? If so how do I ensure that I don't damage my motor?
Here is my setup:
18V Li-Ion Batter -> PWM (Properly Rated) -> 18V DC Motor
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You don't tell us anything about the motor, but brushed motors are pretty tough. Brushless motors tend to be even tougher, but their controllers may be another matter.
A moderate overvoltage won't normally kill a motor, just slightly overspeed it. Now at hundreds of volts, you have to worry about exceeding the insulation breakdown voltage, but not at 21V. And if it's a particularly high performance motor, that overspeed can overstress bearings or add to brush wear, or destroy the rotor through centrifugal force, but otherwise it's unlikely to do any harm, unless the motor is heavily loaded.
Now in combination with a heavily loaded motor, that's a different matter. Loading a motor enough to slow it down, makes it draw a high current, which dissipates a lot of power in its winding resistance, and the high current can also burn out the brushes, melt the commutator, etc. If the motor's this heavily loaded, then the overvoltage supplies excess current, resulting in more heat and more damage.
So, don't do that.
If the motor's lightly loaded, (determine that by measurisg its current) it'll probably be fine.
And if you're still worried, limit the PWM controller to 80% duty cycle when the battery is fresh.
The voltage across a Lithium Ion battery (and most other technologies for that matter) is not constant. It depends on several factors, the main ones being residual charge, temperature, age and the instantaneous current flowing to/from the battery.
A Lithium-Ion cell may be rated 3.6V, but it will be at 4.2V when fully charged, and keep functioning without causing irreversible damage down to 3.0V (lower, in fact, but there is really no point bringing a battery that low as the slope of the discharge is really steep at that point). When making a battery back, you can arrange cells in series to increase the voltage. If you have an 18V Lithum-Ion battery pack, it sounds like 5x3.6V nominal cells in series. This is a pure assumption from my part based on the info you provided. In such a scenario, if your charger can fully charge each cell to its maximum voltage, you could potentially reach 21V. Don't take this information for granted - try to find the datasheet of your battery pack and look for the discharge curve, or maximum charge voltage.
As for whether your motor supports that higher voltage, again I would suggest digging a datasheet. It's likely it supports higher voltages and simply output more power in a less efficient manner. It could also heat up beyond the normal levels if operated beyond the nominal voltage for a sustained amount of time, only the datasheet can help us.
You can also try a Buck-Boost or SEPIC converter to maintain fixed voltage at 18V if that is you want. This will make the motor/PWM power sort-of independent from battery power. If you battery is discharging and going below 18V the regulator should give you more reliable performance as well.
The voltage output of batteries changes by as much as 30% depending on the load and how charged the batteries are. The controller and motor designers take this into consideration when specifying the voltage rating. If you go above the maximum voltage of your controller/motor, you'll damage it. If you go under the minimum voltage, it won't work because the controller thinks the batteries are almost dead (low voltage shutoff). Voltage differences don't affect a motor much. Just make sure the motor controller and motor can handle the maximum voltage of the batteries fully charged. A motor is just a coil of insulated wire. Too many amps and the wire melts. Too many volts and the voltage jumps through the insulation like a small lightning bolt. I have even gotten away with doubling the voltage to a Phoenix Racer electric bike motor and reduced the amps by 25% to make it spin twice as fast. But doing something like that requires special high voltage controllers.
If the cells are LiFePO lithium-ion, then there is little to worry as its maximum voltage will be 3.6 V per cell, and assuming you are 5S, that will be the 18 V that you desire. If it is non-LiFePO, then the voltage can be as high as 21 or 21.5 V (assuming again that the pack is a series of 5 cells). When the voltage drops to 18 V (non-relaxed) then only 19% of the energy remains in the battery. So most of the time, you are operating at above 18 V. With a voltage above 18 V it would be the PWM that may complain before the motor does, as motors generally take a wide range of voltages, as long as they are not overstressed. If the overvoltage is still of a concern then string about four diodes in forward series with the battery output. Each diode will drop the voltage by 0.65 V. So if the battery is at 21 V, the PWM will receive only 18.4 V. Make sure the diodes have sufficient current rating and have adequate heat sinking. Once the voltage drops to 18V, you can bypass the diodes with a switch or relay.