Preheat oven to 375. Cook macaroni as directed on the package. While macaroni is cooking, prepare the sauce.
Heat olive oil in a medium saucepan over low heat. Add garlic and cook 1-2 minutes, or until garlic is fragrant. Whisk in flour, salt and pepper and cook over low heat, stirring until mixture is smooth and bubbly. Remove from heat and stir in milk. Heat to boiling, stirring constantly. Boil and stir one minute. Set aside.
Drain pasta and mix with the drained diced tomatoes. Place half of the macaroni in an ungreased 2-quart casserole dish. Sprinkle with half the salt, pepper, basil and cheese. Repeat with remaining macaroni, salt, pepper, basil and cheese. Pour sauce over macaroni. Cover and bake for 30 minutes. Uncover and bake 15 minutes longer. Serve with fresh basil.