I had some problem to get Soundmanager 2 to work with IE8, because of security issues. The problems were solved with downloading a development branch of Soundmanager 2 (not the module) over at https://github.com/scottschiller/SoundManager2/tree/V2.97a.20110123+DEV

Some information of the issue you could find over here: http://getsatisfaction.com/schillmania/topics/flash_blocked_or_js_flash_...