I believe IE8 has multiple bugs since all of the above suggestions did not work.
The strange thing is that on my DC (windows server 2003), everything works fine under the administrator profile. But when on log onto the machine with a user account other than administrator, IE8 does not work, even though I log on with a user that has administrative rights.
There must be something going wrong with AD... anyone with a similiar setup?
A thousand thanks,