Silicon-based optofluidic devices are very attractive for applications in biophotonics and chemical sensing. Understanding and controlling the properties of their dielectric waveguides is critical for the performance of these chips. We report that thermal annealing of PECVD-grown silicon dioxide (SiO2) ridge waveguides results in considerable improvements to optical transmission and particle detection. There are two fundamental changes that yield higher optical transmission: (1) propagation loss in solid-core waveguides is reduced by over 70%, and (2) coupling efficiencies between solid- and liquid-core waveguides are optimized. The combined effects result in improved optical chip transmission by a factor of 100-1000 times. These improvements are shown to arise from the elimination of a high-index layer at the surface of the SiO2 caused by water absorption into the porous oxide. The effects of this layer on optical transmission and mode confinement are shown to be reversible by alternating subjection of waveguides to water and subsequent low temperature annealing. Finally, we show that annealing improves detection of fluorescent analytes in optofluidic chips with a signal-to-noise ratio improvement of 166x and a particle detection efficiency improvement of 94%.