Steph, a couple of comments. First, I'd be wary of having your lists in too many different places/formats. The simpler the better - if you've got lists all over the joint you're more likely to forget about one.
Secondly, it sounds as though your Project list is getting contaminated with other stuff. Keep the project planning, notes, where you're up to, and so on, separate (have one folder for each project). Your Project list should only be a list of the projects you're working on. This mistake (which I made, too) is similar to a lot of the other common mistakes we make when starting GTD: we're not used to separating the phases of workflow.
The list of projects is just to keep you aware of all the things you're doing. The individual project notes are what you reference when you're deep within that project, so that you always know where you are, what comes next, and what you need to remember or think about. The list is used in the review, whereas the project notes are used when working on (or planning) the project.
Does that help? Oh, and for what it's worth, I'm completely with Katherine about a paper system. It's the simplest, lowest overhead, most easily customisable system (with the shortest learning curve) you can find. I tried some software apps, but went back to paper.