First two tips:
1. Activate the option "Inline content" on your Settings > Media page. Then use the class "fancybox-inline". This will let you have more control over the lightbox behaviour when displaying the form.
2. Give the div#fancyboxID-1 a size, for example with style="width:300px;height:400px"... FancyBox will be using that for the lightbox size.
However, I do not think that will fix your initial issue. If the lightbox is not working, there is probably a conflict with your theme or another plugin. Make sure there are no other lightbox plugins or theme integrated lightbox scripts used at the same time as FancyBox. Sometimes that might work fine but often it is a source of conflict.
- Do you get an error message in the script console?
- Can you see in the page source code if all script files are present?
- Can you tell me how many instances of the jQuery library are loaded? It should be only one, but often a theme or plugin loads a second or even third instance!
- And which jQuery version is used? The version should be 1.8 or above...
Hope these questions will help you debug :)