Some people are allergic to theory, there are plenty of amazing players out there that don't think about music they just play it so don't worry if it baffles you. My advice to fast tracking your playing while staying interested and motivated is to do what I did. I used to play for hours every day when I started, scales and runs up and down over and over - at the end of this all I could do was play a scale very quickly but I was a terrible guitarist. What kept me playing and what made me improve was a fundamental change in how I looked at music.
The gospel according to me is as follows:
1) Listen to great players and think about how they structure their compositions and runs, then really listen to the runs and licks they play and understand how they are done (even f you can't play them). I basically learnt how to play guitar by listening to Jason Becker, Marty Friedman and Vinnie Moore - I have never tried to work out anything they ever played but I spent a lot of time scrutinising their techniques.
2) Don't get hooked into playing scales up and down over and over - if you do then that is all you will ever play. Getting out of this habit is the most difficult thing to do...
3) Imagine what you want to play before you play it. If you are recording a solo, record the rhythm track then put it into your walkman for a day or two - imagine the perfect solo over the backing track. Hum sing or whistle the individual sections until you know by ear exactly what you want to play. THEN, sit down and work it out. Doing this gave me a full understanding of the fretboard that I could never get my learning theory (I'm one of those people who can't think that way - not everyone has this problem). It's all the same at the end of the day, the only difference is in how you perceive the tones on the fretboard. By musical notes, by tab or by the actual tone itself - depends on how your brain is wired. I do it my seeing a fret and knowing what the tone will be before I play it - this requires developing your ear.
4) Learn to play a part on one string, then the same part on multiple strings, then learn to play it at different locations on the fretboard - this will help you to no end when to comes to playing over the whole fretboard.
5) Don't try playing everything fast - play it as cleanly as possible with as much feeling as possible at a very slow pace. This will help you to get away from the widdly widdly type solos that have no tempo and bum notes everywhere. When you can play a shred passage with feeling at 50 bpm's then you can work on increasing the speed until you can play it at 200 bpm. It will sound so much better when you inject it with feeling and develop your own playing style.
6) Develop your own playing style. Forget trying to emulate others like Satch or Vai or Malmsteen - those guys have their own style, turn on one their cd's and you immediately know who is is by their vibrato alone. Having your own sound is so much more satisfying and will make you more proud when you create something unique. You get your own style by focusing on the mechanics of style, vibrato, varying degrees of pinch harmonics, slides to and from notes etc. Alternate picking, sweeping, tapping and legato won't create a style, they just generate the notes - you do need to learn them too though!
7) Playing with others helps to generate spontaneity, this becomes much easier the better you get at the above. When you know the fretboard backwards and can play without thinking about what notes to choose then you can play at the speed of thought - when you can do this you can play anything in a jam situation. This takes a long time and is best achieved as a combination of all of the above.
8) When you are happy with your gear and hardware you will find that you improve faster because you will be more motivated. Every time I upgrade my guitar I get a bit better because I sound better. Better pickups makes your mistakes more audible and force you to improve your technique. This doesnt mean buying new guitars every few months though - common sense will dictate when you need an upgrade (although I have bought some unnecessary 'luxury' items along the way :p )

Hope all of that helps - have too much free time on my hands in work today!