ok the title says it all! what is the difference between yarn and wool? or is it the same thing?
In some countries they use the term wool to mean yarn, but really wool is just a fiber. Using the term yarn is more understood because there are many other fibers besides wool. Cotton, silk, alpaca, wool, bamboo, milk, acrylic, yak…
Calling all yarn wool is like calling margarine butter. Generally the meaning is understood but as Jan says, wool is one fiber that can make yarn. Yarns made of different fibers behave differently. Example: If the “wool” ends you wove in keep coming loose, it might be because they aren’t wool at all but acrylic.
The two previous responders have provided the American tradition: “yarn” is what we work with, “wool” from sheep or rabbits or other animals is the fiber that “yarn” may be made from.
In the UK and countries whose English derives more directly from British English than American English does, “wool” is used for the stuff that we work with on the knitting needles or the crochet hook. This “wool” may be made of wool from sheep or rabbits or other animals. (Traditionally, of course, only the wool from sheep was affordable and/or available to folks in England; thus “wool.”) The phrase “acrylic wool” might even be heard in a British knitting shop and make perfect sense.
The “Yarn Harlot,” aka Stephanie Pearl McPhee, was born and raised and still lives in Canada, where she has raised three daughters. She relates a number of humorous experiences due to this different use of “yarn” and “wool” in various English-speaking countries in her books and on her blog, www.yarnharlot.ca (yep, real “fangirl” right here; I have all seven of her books and they’re all autographed).
So that’s the “difference.” 
so yarn is made out of wool and other fibers?
Yep. Here’s a few…
Sheep, alpaca, llama, yak, bison, rabbit, camel, mohair, angora, cotton, silk, hemp, linen, bamboo, milk, soy, nylon, acrylic…
And within each one are differences in quality and fiber as well.