I usually just consider an Otaku as someone who regularly watches anime and would likely go to conventions for anime such as AX. If you watch anime once in a while, I wouldn't really consider that to be an Otaku. Heck, even if you watch it more than that, I feel to be considered an otaku, it's really got to be part of you, such as a hobby of sorts.
With that said, some people don't like to even use the word since in Japan, the words meaning actually is fairly negative. Being called an Otaku isn't a good thing. Personally, I don't follow Japans meaning of the word since I don't live in Japan.
Well I feel like otaku varies with the massive step above otaku being weeaboo which could be considered an extreme otaku.
A weeaboo is more along the lines of a wannabe Japanese. They are not just obsessed with anime, but Japan as a whole. Almost like they are trying to pretend to be Japanese them self. They will typically use Japanese words fairly often in their sentence.
As of fairly recently, the word has been misused by many. Essentially calling anyone who seems to have an interest in anime a weeaboo.