***UPDATE***
For the time being I have built IE8 on XP Pro SP3 and it's working much better. I am going to try building on an updated Vista VM in three different levels of update:
The XP Pro SP3 IE8 build works fairly well, except bookmarks in the Favorites menu will not open. Bookmarks on the Favorites Bar will open. I'll be checking file and registry isolation mode settings, but if anyone knows the answer right off then please post. Thanks.