@TimeTraveller:
I wish I could help you, but short of suggesting that you try another browser, I'm not sure that I could add anything to what you have already found in the tech forums you've researched.
I have seen other posts in these forums from customers with a problem similar to yours. Check the posts that start at this link:
http://windowslivehelp.com/community/p/83521/490789.aspx#490789
... this customer is also having a very similar problem with IE8.
That is why I have given up on Internet Explorer (after being a dedicated IE user since IE first was released) and have moved to Firefox. IE just has too many glitches for me.
I would recommend Firefox to you, but if you need the Photo Upload feature, then Firefox is not a good choice for you. My other recommendation would be to try Google's Chrome. I have not used it, but it has received very good reviews. You could try it and see if the Photo Upload Feature works (both IE and Chrome can co-exist .... so you will be able to continue using IE8 if you are not happy with Chrome).