For japanese online translators is use
- google : https://translate.google.fr
- reverso : http://www.reverso.net
- weblio : http://translate.weblio.jp
Google and reverso have own their pros and cons, they don't have the same weaknesses at the same place, so I often use both.
Weblio is interesting because it is specialized in japanese, and in addition to the imperfect online translation output, it comes suggestions which are real sentences by native japaneses that are close to your input. This feature is really nice.
If you have firefox there are 2 great extensions for japanese.
ImTranslator is a frontend to Microsoft and Google translators, but you just have to select some text and a little bubble appears, if you click it, a small popup with the translation appears. I find that quite practical.
Rikaichan is the tool you are refering too, when you hover your mouse onto kanji (or words in kana), a popup with dictionary entries appears, so you can try to understand the sentence from the meaning of each word.
(don't forget to download also the japanese's names dictionary, it is not included by default in rikaichan).
If you use chrome, I think there is rikaikun which is a port of rikaichan from firefox to chrome.