You just need it within the document.ready, so the document ready function includes both the slider code and the mousewheel code:
Code:
<script type="text/javascript">
$(document).ready(function()
{
// get slider height
var sliderHeight = $('#jQuerySlider2').height();
// get total height of slider content
var scrollHeight = $("#HOME-LAYER").outerHeight();
// create content wrapper , required for scrolling
$('#HOME-LAYER').wrapInner('<div style="position:relative;float:left" class="layer-content-1" />');
// make layer the same size as the slider
//$('#HOME-LAYER').css("height", sliderHeight);
// hide overflow
$('#HOME-LAYER').css('overflow', 'hidden');
// expand content
$('.layer-content-1').css("height", scrollHeight);
// set max value for slider
$('#jQuerySlider2').slider("option", "min", -(scrollHeight - sliderHeight));
$('#jQuerySlider2').slider("option", "max", 0);
$('#jQuerySlider2').slider("option", "value", 0);
//});move the closing bracket for document-ready from here...
// mousewheel settings
$('#HOME-LAYER').mousewheel(function(event,delta){
var speed = 5;//set the speed of the scroll
var sliderVal = $("#jQuerySlider2").slider("value");//read current value of the slider
sliderVal += (delta*speed);//increment the current value
$("#jQuerySlider2").slider("value", sliderVal);//and set the new value of the slider
var topValue = -((100-sliderVal)*difference/100);//calculate the content top from the slider position
if (topValue>0) topValue = 0;//stop the content scrolling down too much
if (Math.abs(topValue)>difference) topValue = (-1)*difference;//stop the content scrolling up too much
$("#HOME-LAYER").css({top:topValue});//move the content to the new position
event.preventDefault();//stop any default behaviour
});
})//to here...
</script>