I figured it out… in case anybody else has this trouble, here’s what I did:

edit the //fancybox magic portion of jquery.php to look like this:

//fancybox magic
jQuery("a.fancybox").fancybox({
'transitionIn' : 'elastic',
'transitionOut' : 'elastic',
'speedIn' : 400,
'speedOut' : 200,
'overlayShow' : true,
'overlayOpacity': 0.7,
'overlayColor' : '#000',
'onCleanup' : function() {
var myContent = this.href;
if (myContent.charAt(0)=="#")$(".fancybox-inline-tmp").r
eplaceWith($(myContent)[0].outerHTML);
}

So basically just add a , after the overlayColor and add in the onCleanup function.