Trouble-shooting Interference on a home network

I am troubleshooting my parents wireless connection with a combination of inSSIDer, Pingplotter, Speedtest.net. The DSL side of the connection is fine, but the wirless side is a mess. We have a BTHomehub2.0a (WLAN b/g) modem, 3 other BT homehubs (2 using channel 1, the closest on channel 6) are also closeby as is another commercial network (channel 11) with 4 higher power signals set up for a caravan park. So..

inSSIDer suggests that usage of a WLAN channel will still provide interference on neighbouring channels, is this true?

On my Windows 7 laptop, when I am next to the modem, the signal is 5 bars and connection is perfect. However, in some places in the house I get 3/4 bars on the windows signal indicator, but the packet loss can be 30/50%, and latency upto 1.5 seconds. Is this a case of interference, like loud music being blasted out by even louder music?

Given we can't change channels of my neighbours, would a modem with hopping technology improve issues? BTHomeHub apparently does this. Any other modems that would help here?

If we decide to stick with the BTHomehub2...
a) do we try to fit in between their channels or are we best to go head to head on Channel 1/6/11?
b) as we will probably need more 'grunt', will a wireless repeater just boost our neighbours networks as well?
c) I cannot use an external antenna on a BTHH2, How does a wireless booster work?
d)How is the booster different from the repeater, as neither are physically connected to the existing set-up?

A lot of detail here, I know, but all the tools I am using are freeware, and my knowledge is only what I have learnt as an end-user of WLAN. Many thanks for any help or suggestions where I can find more information on any of these issues.

Robert