I second what Markos have said.
It is possible to think in L2, even with a dead language and without immersion. (It is certainly good to have immersion.) I could offer my own experience with English as a piece of evidence. My native tongue is Cantonese, which is immensely different from an Indo-European language. However, I quite usually feel more comfortable with English than Cantonese when dealing with academic matters, especially Western philosophical texts written in the English language.
The point is you do it the right way: translating is not the only way to understand and produce something in L2. If you learn a language with an intelligent method and right materials, you can succeed.
In actual practice:
As Markos have already mentioned, I suggest you try reading aloud what you have read; speaking aloud what you have listened from tapes; and progress from simple sentences to more advanced narratives.
In your mind:
You should try to pair up the Latin word for “apple” with a real apple, rather than to match the Latin “apple” with the German “apple”.
Perhaps you will find that, for example, when you say “apple” in Latin, the German “apple” and English “apple” also show up, but this is absolutely fine - after all, you do know those languages, and all of them are connected to the idea of a real apple. The point is, if you pair up words and ideas in the way I have mentioned, you are not translating and you are in real sense thinking in that language, albeit the fact that several languages show up at the same time.
The grammar-translation methods are fine per se. They introduce the language systematically and really let you “understand” a language. But most of them do not tell you clearly that in order to “know” a language and think straight in it, you cannot just do it in a way that you simply change the English codes to German ones word-for-word, for instance:
English text: I love you.
I = Ich
love = liebe
you = dich
Therefore, the German should be: Ich liebe dich.
Of course in this way, you get the translation right. But you are not thinking straight in it.
What you really have to do is to know the idea the English text conveys, and then express that idea in German. I would say this is the right way to do the translation exercises, for instance:
English text: I love you
I love you = a boy + a gal + a big red heart
How would I explain the picture “a boy + a gal + a big red heart”?
German version: Ich liebe dich.
I wish I could have explained my point more clearly… To put it simply, it is the difference in thought pattern, i.e., the pairing up of words and ideas.