Does slippage occur on MtGox when 'Market Order' is unchecked? If you were to uncheck the 'Market Order' box and buy 10 at 110USD, the order can be partially filled by 1 at 110USD and there are 9 more for sale at 113USD, the matching system would partially fill your order and then wait, right?

Does "slippage" only occur because of market orders?
No, slippage also occurs because the price can move adversely between your decision to sell and your order's execution on the market. Typically in financial markets the other participants can see a large order and move their limit orders accordingly.

What you're talking about is called "sweeping". This is simply the fact that there are not enough orders at the best price to match a sufficiently large order. If you have a market order you will then end up filling the next price, which will be worse.