So, exactly where are you FINDING these job candidates? sounds like a piss poor advertising and recruiting practice if 99.5% are not valid candidates.
Geesh, I advertise on Craigslist in Austin or Phoenix and over 1/2 of the people who apply are able to pass a test like this. And this is with modest pay for an easy and flexible work at home job (ssh, svn, etc). Plus I get maybe 10 to 15 replies running the advertising 1 time, and those replies come in within the first 5 days. So I get 5 to 8 real job candidates and I can focus on long-term aspects of which person is best.
In other words, just like writing a good resume is important, writing a good job description and knowing where to find people is just as important.