Then I installed a security update for IE8 (IE8-WindowsXP-KB2618444-x86-ENU), rebooted and now the update seems to be working.
Thanks for the update. I got word that both IE8 and Chrome are crashing on the box I reinstalled XP on a few weeks back. Will tell them to bring it by and let me take a look. Virtual XP mode is working fine on my Windows 7 laptop.