I dont understand this fascination (not just you) with loading the jquery from googleapis… I have no idea if they create the jquery the same as wp does… you already have it on your server – should load faster locally then an http request…
and in this case, you are loading both the googleapis and the wp version… so potential for conflicts stil… especially if the minimizing is done differently…
and you do get js errors when you click on the image and try to enlarge…
at this point, I cannot say definitively that its the two jquery versions that are causing the conflict… as a quick test, you might just comment out that loading of the fancybox jquery and see if it works since the wp version is already loaded…