RE: Zürich to Garmisch scenic route
We spent a month in the Lindau area last May-June and I can highly recommend the area. Lindau itself is lovely, both upper and lower old towns, but the lake is a dream. We drove through Garmisch-Partenkirchen and it was nice but I highly recommend you take the time to stop in Mittenwald. It's a little south of Garmisch but well worth the detour. It was one of our favorite little towns on the trip.
Try to take a boat trip on the Bodensee (Lake Konstanz). There are lots of different boat tours and the lake is lovely, as is the town.
I wish I could make a recommendation on your choices, but we were only on the northern section. I will say that we enjoyed Bavaria much more than Austria . . . with the exception of Innsbruck which we loved. The entire area is so beautiful that I think either choice would be very pleasant for you. We also found drivers in Germany generally much more polite than in Austria. (Apologies to all the good drivers in Austria!)
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