Not sure about the OP but I've had the following issues with IE8:
First, I had set the X-UA-Compatible header to force IE into standards
(IE8) mode. Fancybox was having an error due to expression support
being removed. Then I noticed that it shouldn't have been running the
set/removeExpression calls anyway. It turns out that it just quietly
ignores the header for intranet sites! It was reporting the browser
version as 7 but not supporting all the features of IE7.
After fixing the standards mode problem I now have an issue where the
PNG borders turn black during the animation. Once the box has animated
into position everything looks ok. Making Fancybox call fixPNG fixes
the problem, although native PNG support should work in IE8. The
easiest fix is to add another boolean isIE8 and then run fixPNG if
(isIE || isIE8).