IE8 rendering on IE9 uses IE8s engine. Same for IE7. It only uses IE9 engine when you're using compatibility mode or IE9 rendering directly. Not much more I can advise as I've no means to test the issue directly in IE8. IE9 being a forced upgrade through auto update should prevent most of these issues and this is the only report I've seen of this problem; I recommend you inform your users to upgrade. As you're not using CB in a normal situation (we don't support pop-up login) I don't see this being a bug in CB, but likely a JS incompatibility with IE8 preventing the pop-up from properly posting the form (again, it's just an HTML form). Please create a test install of just Joomla + CB and login should work perfectly fine as confirmed in all my tests (without your pop-up login or any 3rd party extensions).

Unfortunately I've no idea what could be causing this on IE. As I've stated a few times the login process is just a standard HTML form that would work way back on IE6 or IE5 even as it's PURELY HTML and nothing more.. no JS.. nothing. So there's absolutely no reason for IE to simply fail to POST it unless there's a problem in IE it self, which is extremely likely because IE is garbage. It's more likely that something installed or even security in the browser/webhost is intercepting the post and rejecting it.. maybe domain mismatch or something.