I was in the market for a fresh grad, someone who is a good programmer, but also a solid investment, because as a company, we would be dumping a load of effort into someone.

Without any significant experience, the only thing that differentiates people is their pedigree, ie. the school them come from. It is a differentiator. If I get a resume from San Jose State or Chico and then someone from Berkeley, I will be much more interested in someone from Berkeley. It takes significant amount of effort to get into Berkeley, so it already shows something about the person. Sorry, but that's how life works.

School projects are mildly interesting, but you have to realize that no matter what you do in school, it doesn't matter because it doesn't hold a candle to working in the "real world".

The primary reason for this is that in a real-world environment, you have to work with and get along with a large number of people, and intangibles count. Being organized, being easy to get along with, etc are pretty damn important, too, and this comes out with experience.