Seriously, I don't think I'll ever fully understand this show at all.Was Lain even human to begin with? And if she wasn't, then why is she in the real world?I need to watch this show again.

You're not supposed to fully understand it. It is intentionally cryptic so that everyone can fill in the blanks on their own.

Neuro39 said:

Was Lain even human to begin with?

The show is intentionally cryptic, yes, but at least that part is very clearly established on the last episode: Lain convinced herself (well, was more like "God" convinced her) that she was nothing but a computer program and her body was fake, until Alice showed Lain how her heartbeat proved that her body was real.

Now, why she was in the real world? And where/how she got this human body? Well, that stuff is cryptic (more like, they don't really address it at all). But a theory is that she is an entity born from the border of the real world and the wired, and she just decided to become human (for a whim or for loneliness). How she did it is not explained. After she got a human body, the people of the Tachibana Laboratory assigned some people to play the part of being her family, and that Lain intentionally decided to forget her real identity in order to play the part of "daughter".