Freudian Methods and Literary Criticism?

I have to unfortunately admit that I had never actually read anything written by Freud himself prior to this class. I had heard of his theories though, and had even used them to analyze literature. I also have to make another confession (and yes, it is related to what this post is going to eventually be about)...in one of the songs from the album 'Out of the Vein' by Third Eye Blind, the lead singer Stephan Jenkins sings the following lyrics:
Freud said that love
Was a good psychosis
But I don't know
I've had too many doses
He's a creep
And we all know that
He probably made it up
I always thought these lyrics were witty and funny. Not having a solid opinion of my own, I also did agree somewhat with those who thought Freud's theories were interesting, yet mostly perverse and misogynist formulations. After reading the selection by Freud in our text, I was particularly interested in going back over the text to find some sort of understanding of Freud's views on words and language. I was also very interested in how psychoanalytic criticism focused on the literary text as a manifestation of unconscious drives rather than focusing on the conscious drives or sociocultural influences. Even though Freud's ideas of condensation and displacement seemed so strange, they helped me to see how the psychoanalytic critic works to decipher symbols to uncover the 'true' structure or truth by reading through these various surfaces. Freud wrote that, "The 'creative' imagination, indeed, is quite incapable of inventing anything; it can only combine components that are strange to one another" (26). Freud and psychoanalytic critics would then believe that the truth is disguised and needs to be unlocked. Freud also relates dream-work to language and remarks that dream-work has its counterpart in the development of language. They are similar because words and sounds are malleable, meaning can often be reversed or changed as can elements in a dream. Freud also states that only later were words linked up into thoughts, so there is an interesting relationships between the development of the mnemic images into thoughts and words. Words to Freud seem to be part of the whole, parts of puzzle pieces which need to be examined and shifted around in order to figure out the larger picture, the underlying 'true' structure.