I just read an interesting article on Bertrand Le Roy’s blog. The most important information:

It so happens that the menu control is making a bad assumption on what the default value for z-index should be. We debated this at length with the IE team, but it became clear as we did so that they were right and that we were wrong. We had to fix that.

So here it is, the patch for menu is out and you can apply it to build IE8-compatible ASP.NET WebForms sites…

Windows 2000, XP, Server 2003:
http://code.msdn.microsoft.com/KB962351/Release/ProjectReleases.aspx?ReleaseId=2294

Windows Vista, Server 2008:
http://code.msdn.microsoft.com/KB967535/Release/ProjectReleases.aspx?ReleaseId=2328

(the KB article is not yet ready but will be published shortly)

Read the entire article over here: http://weblogs.asp.net/bleroy/archive/2009/03/23/asp-menu-fix-for-ie8-problem-available.aspx