I've been playing guitar for a few years now; off and on. Through this whole time all I have been doing is learning songs through reading tab. I've commited to memory and can play a nice variety of songs and my fingers are well trained for playing. The problem is that I don't know many chords (just the majors, some minor, a few barre), I cannot read notes well, and I know very few scales (only a couple major). Therefore, when I look back at my guitar-playing days, they seem wasted to me because although I can impress some people with some tunes I can play, I doubt I would be very useful in a band or even in a jamming session. I think it's time that I become literate in guitar. So how would I go about doing this? What do you guys suggest I learn and how I should I practice?

and somebody please explain the main concept behind scales.

It's sounds like like you know what you want to attain on your instrument. Honestly, what you need to do is start taking lessons with a well respected teacher in your area. Take one lesson a week, express to that teacher what you want to accomplish, practice exactly what and the way they say, and do it for at least 90 minutes a day, six days a week. You will get better. Books, DVD's, the internet - these are all great tools but really only supplemental to a "hands on live" teacher.

As far as scales go ... check the search function in past "lessons". There's a ton of info in there. Good luck, - KL

Jibby! Hey, you have the bug. That thing that turns us all into crazed mirror gazing rock stars. I agree with Klasaine, but I would give you this advice also. Learning what and what not to play is just as important as "How" to play. Alot of the really great players never play the same thing twice. This steems from them have freedom in their minds. They can play any scale note for note and clocked correctly, but choose to play strictly by "Feel". Learn what "You" like to hear/play and add that to your lessons. Notice I said "hear", you should find a tone that inspires you. This will make playing much easier. I bet your teacher will be asking you how you played something in short time. I hope this isn't too deep for ya. Just listen to your hero's and hear them all in yuor mind when you play. This is the key to becoming a confident decisive player.

Sounds like you need 3 things. First, learn how to construct chords from scratch. You should be able to build Major Family (Maj.,M7,M9,M11, M13), Minor Family (min.,m7,m9,m11,m13), and Dominant Family (7,9 11 13) chords off of ANY NOTE on the guitar. This is not as scary as it may seem. There are only really 5 chord "forms" on the guitar. They are the C,A,G,E,and D forms.
Second, you need to know how to harmonize the Major Scale Pattern (Ionian). This means, you need to know how to build chords from tha parent Major scale.
The third thing I would suggest, is to try picking out simple nursery rhymes on the guitar. Just use one string, and start in the middle of the neck. Maybe about the 7th. fret of the skinny E string. Play a note, and hum it. Next, hum the second note of your nursery rhyme. DON'T go to the third note, until you have figured out the second one. This is where most people get into trouble. They try to go too far, too fast. Get that second note.
Remember, there are ONLY 3 Choices for the next note of any song. It is either higher than the first note, lower than the first note, or the same as the first note.
If you would like, I will keep an eye out for your posts, and help you. Try to pick out Mary Had A Little Lamb. Start on the skinny E string, 7th. fret. I will give you a hint:The second note is lower in pitch.
Let me know how you're doing. Good luck.

thx guys, i will try the recommended exercises. Swain, thx especially for specifics.