jquery image fade not working

Hello, I am running into some problems using a the jQuery innerfade plugin (http://medienfreunde.com/lab/innerfade/) with WordPress. The plugin will work fine with stand alone html pages but once I try to implement it into my WordPress php pages it will not function correctly.

Currently when I hard code the html into my index.php page it will display both list items instead of showing one and performing the alpha animation. I have called both of the external .js scripts in the header.php file and they are both on my server. Anyone had any problems with this before or is there some type of conflict with external .js files and WordPress?

Thanks!