Been there, seen it!
I've seen exactly what you describe both in college and at work. I was the one in class that ended up assisting the instructor in helping others grasp what they were seeing. A few would get it and then be able to apply it, but many others couldn't tell a SIMM/DIMM from their aunt Fannie's bobbie pin. It's the ones I run into at work that bother me, no matter how many times I show them something the lightbulb never gets any brighter. We have one guy on our team that came from a non-IT background and has passed many MCSE cert tests and is still trying to figure things out. He has implemented a few things we have no use for just to prove he learned it in cert class.
If you want to hire competent professionals, look for the ones that have an IT/IS degree and 3 or more successful years of experience in the industry.