Ajax Script Not Getting Past A State Of 1 - Video Explanation

I'm after a super quick turnaround time on this. I will be checking the project every 15 minutes to award the project. If you can't work on this straight away don't bid. Take a look at the attached video, it explains everything. In short, my ajax script isn't getting past a state of 1 and I have no idea why. The exact files that I used in the video are also attached.