I think you would instinctively know if you were missing the mental faculty to navigate. In other words, I think you will know whether you are lacking the hands-on skill of applying conceptual knowledge or whether the conceptual knowledge itself isn't on your wavelength. It sounds like the former because you can do the work in the classroom.
Flying seems to be a bit like golf insofar as the brain can make things harder than they need to be and one bad experience seems to reinforce that tendency. You need some ways to give the brain some confidence and positive feedback instead. In short, you need some ways to make it seem easier. In addition to the suggestions already made, how about:
- picking some easy routes to get confidence. Some are harder than others.
- try flying the route using Google Earth - just to give your mind a picture of the route from the air and to spot landmarks.
- It sounds like you know when you are lost (which is good) so have a route which includes some unmistakeable landmarks which you stand a good chance of seeing for miles around, which you can fly to and re-gain your position (having checked before you depart that there aren't any no-go areas within a radius of such marks)
- Avoid routes which will take you towards the sun and in haze because VFR flying gets more difficult then at the best of times
- Have a VOR/DME configuration and practice being able to work out which radial you are on, and the distance from it. That will give you a fix if you get lost - which means you won't be lost for long, and it won't be so stressful when you are