I have updated your code to get the content sliding in and out. I changed a few styles to make it look a little clearer in jsfiddle since I didn't have your background images.
I changed your jQuery variables to not use $ at the beginning (personal preference) but otherwise it is the same. I removed the "panel" class on your links and changed the way floating was set up on the left and right divs.
<a href="#target1">Target 1</a><br/>