How to fix "This display does not have a source for contextual filters"
This is frustrating.  AFAIK

"Content Pane" displays do not have context passed to them ever.
Views have "master" displays that do get context passed.

The "master" display is essentially the view's defaults.  To see it, there is an option here:  admin/structure/views/settings/basic
(or just delete all other displays)

To add a view's "master" display to a panel, you need to see it first:
http:///admin/structure/panels/settings

Now go back to the panel, add content, select "views" instead of "view panes" to see your view.