Help me with my .php problem?

I am trying to get the first post on my index page to show up in the section now labeled “featured” on the page although it is coded as “headline.”

I can tweak the styling and .css if someone can help me with the coding.

Here is my index.php code:

<?php get_header(); ?>

	<?php if(!is_paged()) { ?>
	<style type="text/css">
<!--
.style1 {
	font-weight: bold;
	font-size: medium;
}
-->
    </style>

	<div id="top" class="clearfloat">
	  <div id="headline">
	  <div class="title">featured &amp;raquo</div>
		<?php include (ABSPATH . '/wp-content/plugins/featured-content-gallery/gallery.php'); ?>
	  </div>

**MISC CODE REMOVED**	

	<div id="middle" class="clearfloat">
	<?php $display_categories = array(45,4,7,13,1); $i = 1;
	foreach ($display_categories as $category) { ?>

	<div id="cat-<?php echo $i; ?>" class="category">
		<?php query_posts("showposts=1&amp;cat=$category")?>
		<span class="cat_title"><a href="<?php echo get_category_link($category);?>"><?php single_cat_title(); ?></a></span>
	</div>

	<?php $i++; ?>
    	<?php } ?>

	</div>

	<?php } ?>

	<div id="bottom" class="clearfloat">

	<div id="front-list">	

<?php
      $page = (get_query_var('paged')) ? get_query_var('paged') : 1;
      query_posts("cat=-5,-6&amp;paged=$page&amp;posts_per_page=5"); ?>
<?php while (have_posts()) : the_post(); ?>		

	<div class="clearfloat">
	<div class="title"><a href="<?php the_permalink() ?>" rel="bookmark">
	  <?php the_title(); ?>
	</a></div>
	<div id="metawrap">
	<h3 class="cat_title"><?php the_category(' | '); ?> &amp;raquo</h3>
	<div class="meta">[<?php the_time('j M Y') ?> | <?php comments_popup_link('No Comment', 'One Comment', '% Comments');?> | <?php if(function_exists('the_views')) { the_views(); } ?>]</div>
	</div>
	<div class="spoiler">
	<?php	$values = get_post_custom_values("Image");
	if (isset($values[0])) { ?>
      <a href="<?php the_permalink() ?>" rel="bookmark" title="Permanent Link to <?php the_title(); ?>">
	<img src="<?php echo bloginfo('template_url'); ?>/scripts/timthumb.php?src=<?php echo get_option('home'); ?>/<?php
$values = get_post_custom_values("Image"); echo $values[0]; ?>&amp;w=300&amp;h=150&amp;zc=1&amp;q=100"
alt="<?php the_title(); ?>" class="left" width="300px" height="150px"  /></a>
      <?php } ?>

	<?php excerpt('40'); ?>
	</div>
	</div>

      <?php endwhile; ?>

	<div class="navigation">
		<?php if(function_exists('wp_pagenavi')) { wp_pagenavi(); }
			else { ?>

			<div class="right"><?php next_posts_link('Next Page &raquo;') ?></div>
			<div class="left"><?php previous_posts_link('&laquo; Previous Page') ?></div>
			<?php } ?>

	</div>
	</div>

	<?php get_sidebar(); ?>

	</div>	

<?php get_footer(); ?>