hmmmmm................. me too had many problems with IE8 on XP SP3.
In many instances the compatibility mode failed to resolve out-of-place Menus in websites.
Also while opening many sites "Internet Explorer encountered an error and will close down .... bla bla" appeared.
Fed up I went back to IE 7.
In reverting back to IE7 I had many problems.
After quite a bit of troubleshooting time I restored the registry as it existed before installing IE8 and resolved all issues in IE7.( I keep registry back-ups for the last thirty days using ERUNT
*www.larshederer.homepage.t-online.de/erunt/ and that saved me)
Now I am back on IE7. Bye bye IE8.
And the first thing I did after restoring IE7 was to backup the C drive which I had not done for more than a year

. Had I taken a back-up before installing IE8,I could have reverted back in a jiffy.
Now I have learnt my lesson.Thank you Microsoft