Found a curious 'Feature' or BUG With the file upload.
When your styling opacity of the button is less then 1 the 'Browse' button does not work. But this was cross browser.
Fix this with:
.btn{
opacity: 1 !important;
}
I've tried both up and downloading in IE8 and I'm not experiencing any problems.
Of the top of my head I'd say you're either dealing with another (hidden) variable or you're having a problem with IE8's notoriously annoying pop-up blocking policy. You could try digging around in IE's security settings to see if there isn't a check-box blocking download pop-ups somewhere.