How to display a node in overlay popup effect?
Let me answer my own question. Based on j2r's comments and http://drupal.org/node/1378438 question from this node I was able to solve my issue.

Create href as node/nid/lightbox and rel as lightframe. This will result in displaying the whole page in the lightbox. To avoid this U need to create a page--contenttype.tpl.php (In my case) http://www.digett.com/blog/01/11/2012/overriding-page-templates-content-type-drupal-7 and then remove the header, footer and other unwanted regions in the page.

Once this is done I am sure u will get as what I got.