Thanks for the replies, sorry I couldn't write back soon enough.. I usually take awhile to respond to impossible issues like these.
I've pretty much tried everything I can to physically move that router, even had a technician from my ISP come over and look at it. The 'internet' cable running from my ISP into the utility room isn't movable unless they install a new one at another area, which would cost $75/hour to do. He managed to extend the ethernet cables running into the router by about a foot so that I could move it slightly further away from the water heater, but this obviously didn't do much to fix the problem.
He gave me a few other ideas, and even gave me a female-to-female ethernet cable, which let's me route the internet up to a walljack in an office, but setting the router up there caused me to lose connection with other devices in other areas of the house, so I moved it back
Fact is, I like the router in that utility room, its practically in the heart of the house.. but the only problem is that water heater.
Dwarf, an antenna extension is a good idea, definitely in the right direction anyway. I've never used one before, and I'm not exactly sure how it would hook up to my Netgear, but it just might do the trick. I'll have to look into it.