jQuery 1.8.+ contains breaking changes and is not compatible with Kendo UI versions that have been released before it. You can try using the service pack that will be released in a few days.
The problem seems to be related to the animation and is not trivial to track down. If we do not manage to fix it by the service pack, you will have to disable Window animation in IE8 by setting animation:false in the Window configuration. Using jQuery 1.7.# is the recommended option.
the Telerik team
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