Why does it seem that rigidbody seems of when moving the character?

What I have:

So I'm pretty new to C# but know a few other codes. Everything I am doing is in Unity2D. Now I have gotten my character to move using the mouse and that it has like a "lag" or "delay" and that the player moves faster the farther away your mouse is.

The Problem:

Now the only problem with this, is whenever the player collides with objects, the player seems to studder and jerk around. My player also doesn't seem to put an effect on Rigidbody2D's objects anymore. Although I can slightly push floating blocks, they don't spin and rotate anymore like they did before. I beleive this might be from using transform and not using a force like with the other code I used, but what do I know.

The C# Code:

 using UnityEngine;
 using System.Collections;
 
 public class PlayerScript : MonoBehaviour {
     public float speed = 3.0f;
     public AudioClip thudSound;
     public bool mouseClick = false;
 
     private Vector3 targetPos;
     
     void Start() {
         targetPos = transform.position;    
     }
 
     //Thud Sound
     void OnCollisionEnter2D(Collision2D target){
                 var absVelX = Mathf.Abs (rigidbody2D.velocity.x);
                 var absVelY = Mathf.Abs (rigidbody2D.velocity.y);
                 if (absVelX <= .01f || absVelY <= .01f) {
                         if (thudSound)
                                 AudioSource.PlayClipAtPoint (thudSound, transform.position);
                 }
     }
     
     
     void Update () {
         //To turn on and off the follow mouse
         if (Input.GetMouseButtonDown (0)) {
             if(mouseClick == false){
                 mouseClick = true;
             } else if (mouseClick == true){
                 mouseClick = false;
             }
                 }
         //Follow the mouse
         if (mouseClick == false) {
                         float distance = transform.position.z - Camera.main.transform.position.z;
                         targetPos = new Vector3 (Input.mousePosition.x, Input.mousePosition.y, distance);
                         targetPos = Camera.main.ScreenToWorldPoint (targetPos);
         
                         transform.position = Vector3.Lerp (transform.position, targetPos, speed * Time.deltaTime);
                 } else {
             //Stop following but continue sliding
             transform.position = Vector3.Lerp (transform.position, targetPos, speed * Time.deltaTime);
                 }
     }
 }
 

I would really appreciate it if you could help me understand this and thanks for your time!