Creating a CSS3 box-shadow on all sides but one

In your sample create a div inside #content with this style

#content_over_shadow {
    padding: 1em;
    position: relative; /* look at this */
    background:#fff;    /* a solid background (non transparent) */
}

and change #content style (remove paddings) and add shadow

#content {
    font-size: 1.8em;
    box-shadow: 0 0 8px 2px #888; /* line shadow */
}

add shadows to tabs:

#nav li a {
    margin-left: 20px;
    padding: .7em .5em .5em .5em;
    font-size: 1.3em;
    color: #FFF;
    display: inline-block;
    text-transform: uppercase;
    position: relative;
    box-shadow: 0 0 8px 2px #888; /* the shadow */
}