This apparently has nothing to do with IE8 vs IE7. I'm running IE7 on Vista Home Premium, and the problem first began to appear last night right after I installed the HP Photosmart C6380 printer software. The problem appear to be the plugins that the HP software installed in the IE browser to enable saving and editing web clips. The uninstall and reinstall of IE7 or IE8 only masks the issue because you are really just uninstalling the plug ins. Same thing with using the Reset option in the Advanced section of the IE config properties... it just disables all plugins, and *poof* the problem goes away.
To fix, in IE, just go to Tools > Manage Add-ons > Enable or Disable Add-ons ... then look for the "HP Smart Select" and "HP Smart BHO Class", select each of them and then select the "Disable" option.
I actually like the software, so perhaps HP will come out with a fix for the issue. Nnote: I ran the HP update program for the Photosmart printer software, but it told me it was up to date.