As an American Spanish teacher who has learned the language from Scratch, all I can sasy is "hang in there!"
Fluency is a long process and truth be told, a foreigner can never really be fluent in a foreign language since that usually requires fluency in the culture of the country as well. Being native to a place is really the only way but we "extranjeros" ("foreigners") can get very close.
I studied Spanish in school in the United States from 7th grade through college and then did a Masters program here in Madrid in Spanish Language and Lit. When I came over to Spain for the first time after college I had 10 years of formal language learning under my belt and during those 10 yrs. I had fallen in love with the language, I was like a sponge soaking up everything I came across related to Spain and Spanish.
Well, when I arrived in Madrid for my Masters program, the classes were easy to follow for I was prepared for them but outside of class, in the real world the Spaniards made my head spin. They spoke so damn fast

It made me feel as if my 10 yrs. of language study got me nowhere

I lived with 4 Spanish college students here and we got to know each other well, I hung out with them and their friends and none of them spoke any English. It was sink or swim and I was just floating. After about 6 months I could follow them well and I used to yell at them when they would slow down when they spoke to me, I wanted the real deal!
I soon found out that with the base I had and a decent amount of time here, I was assimilating well into Spanish society.
Today I think that I am as fluent as a foreigner can be and I hardly ever have problems understanding the natives
My best advice to anyone who is floundering with the language is "become a sponge", soak it all in and do NOT get frustrated.
Movies help a lot, especially the DVDs mentioned above where you can turn the subtitles on and off and run through the scenes over and over, catching a little more each time.
If you do not have a DVD player, don't be afraid to go to Spanish movies in the theatres and try your best to understand them.
"Intercambios" (language exchanges) with native language speakers of Spanish are easy to find, try my classifieds section at
www.multimadrid.com/classifieds for loads of Spaniards looking to meet and practice with native English speakers

Do not underestimate the usefulness of sitting with a perfect stranger (native Spaniard) and practicing Spanish for an hour and English for the second hour. It is mutually beneficial and fun
Saludos,
jer...