Blurring backgrounds on Trigger or Button click

Alan, is the attached what you're looking for? (I only did the first slide.)

Storyline doesn't allow us to apply an animation to an object in a state if that object does not already have an animation. However, you can copy an object with an animation and paste it into a state and the animation will be retained.

So, to repeat this for Slide 2, open the States tab for your background image, select the blurred state and copy that image and select Done to let Storyline know you're done editing the state for the moment.

Paste the blurred image onto the slide as if it's a new object. Apply an animation (0.75 seconds looked okay to me). Copy (or cut) the animated blurred image, go back to your background image, edit states and paste it into the blurred state. Send it to the back, Select the front blurred image (the one without any animation) and delete it. All that will remain in the blurred state is the animated version of the blurred image

While still in the Edit States mode, copy the Normal (unblurred) image and paste into over the blurred state. Send the unblurred image to the back. Then select Done. 

When you preview this, you should see a smooth transition to the blurred state when you select a tab. To make the effect more noticeable, you might consider slowing down the motion path animation that brings up the panel. You can change the timing of the fade-in of the blurred image by editing the blurred state and selecting the Animation tab (that is, you don't need to repeat the steps above to change 0.75 to 1.0 or whatever; once applied, you can edit the animation of an already-animated object in a state).

Hope that helps.