function createPanelList(var* panels)
{
PANEL* selection1 = {
pos_x = 0; pos_y = 0;
digits(10,10,1,*,1,1);
flags = VISIBLE;
}

This won't work - you can not declare global objects in a function. Only local and static variables or pointers can be declared within a function. See the manual for the difference between local and global variables:

http://manual.conitec.net/aarray.htm

What would work is:

PANEL* selection = pan_create(...);

This can be called in a function. PANEL* name = { ... } however is a global declaration.