My garage has reflectix [url]http://www.reflectixinc.com/[/url ]insulation on all the walls and ceiling with is like silver mylar coated (2sides) bubble pack. I believe it is not only a radiant barrier but a wifi inhibitor as well.
SO my next step is to go with my original plan - which I think would yeild the best connection - which is routing an Ethernet cable from the house to the garage, either by trenching it in conduit underground (under a number of concrete side walks. Or flying it parallel to the Phone wire that goes from the house to the garage.
Does anyone know about weatherproof Ethernet cable?
or is there a way to use regular Phone wire as Ethernet?
Could you mount an outdoor antenna on the garage? If not, does the garage have a window facing the house? A clear path would work wonders.
If you run cable, from a safety standpoint (lightning strikes/surges), you need to have a protector wherever the cable enters a building. Or else, run fiber instead of copper.
For existing phone wire, some DSL modems can be configured to work in pairs without a DSLAM, so you could run DSL between the buildings (provided you isolate it from any existing DSL service). However, it would be best that the cable be twisted-pair, not old-school quad wire. Quad wire has red/green/yellow/black, while twisted pair would have blue/white and orange/white pairs. You could put the phone on one pair, and the DSL on the other pair to keep it away from telco's DSL.
Are there neighboring WiFi networks sharing the same channel? That could also be affecting your performance. Channels 1, 6, and 11 don't overlap, so if there are a bunch of nearby installations on 6, try switching yours to 1 or 11.