Since water doesn't flow uphill, I don't think you have much of a choice but to lower the connection in the wall. Where I live, on multi-family dwellings, it is illegal to do any plumbing unless you are licensed for liability problems - since your dwellings are connected, a change you make can seriously affect one or more of your neighbors and you wouldn't know it. Also, if the fittings aren't aligned fairly well, tension or torque can cause them to never get a good seal. I think you have a combination of the two since you normally would be able to make it watertight, but then still have a drainage problem.
Think it is time for a plumber...not that I like the idea when I'm pretty sure I could do the work myself, but there are times when it is much more efficient, and you know it will be done right. I think this is one of them.