Originally Austrian, grew up there actually, and have spent a few years at a time in Germany (specifically around Solingen, Dusseldorf and Cologne) working so I'd say I'm fluent... got a lot of grief at work due to the slight austrian dialect, so was forced to adopt the "hochdeutsch" the northeners speak, I now reserve my austrian slang for trips to Bavaria, Tyrol and of course Austria.
I found that people from the north of Germany, have genuine difficulty understanding austrians, I found the same with a Bavarian colleague who also got a fair bit of stick for his accent 
Learnt English from a young age as my dad loved to spend time over here, and became obsessed with the culture. So much so he forced me to go to uni over her and I spent 3 years occupied with that. Though looking back, time well spent 
I've spent the past 7 years living 'full time' over here and have had no problems integrating, and I found my accent completely disappeared aswell, so could pass for an (albeit eccentric) englishman.
I think Alpin and lardcore put it rather well, the best way to learn a language is to live there, and essentially interact with the people as well as the culture... of course a bit of prior knowledge is handy (grammar especially) for interaction initially but you really do learn the most talking to people, not sitting behind a desk. My dad made us watch english programs and read us english children's books as kids and somehow, part of it stuck! Made life a hell of a lot easier as a student, and I did find that movies and reading daily newspapers helped a great deal!
Now, to translate Mr Alpin! 
:
"My German is relatively good. I've been here for nearly four years. I have a german girlfiends, who I've known for almost ten years, but before I came to Germany, I could hardly speak any German. I could only order a beer and a "brezn" (no real translation for it :P), and say hello.
Initially I spent 2 months at a Language School- (my)/ the girlfriend studied further north, and I wanted to to be closer to the mountains. At school, I only learnt the "bloody" (to put it nicely ) german grammar. After the two months, I spent a lot of time hanging around with chaps that were "into bikes" (sorry no proper translation). Most of them could also speak english, but almost always spoke german. With them I could consolidate my vocabulary. After some time, I found a job as a carpenter, here I could only speak german and have again learnt a lot.
I think the best way to learn a language, is to live in the country in which it is spoken.
Now I have no problems chatting with anyone. Some people from North Germany think that I'm from Bavaria. I can understand the people from the "alpenland" (guessing you mean to include Austria in that?), something that many north Germans cannot do... (so very true )
In case you're going to be out an about in South Tyrol and Austria, then it's probably best you learn your german there. I learn my German in Bavaria, and it has paid off."
Hope you don't mind alpin
But to Mr Grim, enjoy yourself whatever you do... and good luck.
Chris
