Use this function. Change your 'fadeOut' to 'customFadeOut'.

(function($) {
$.fn.customFadeIn = function(speed, callback) {
$(this).fadeIn(speed, function() {
if(!$.support.opacity)
$(this).get(0).style.removeAttribute('filter');
if(callback != undefined)
callback();
});
};
$.fn.customFadeOut = function(speed, callback) {
$(this).fadeOut(speed, function() {
if(!$.support.opacity)
$(this).get(0).style.removeAttribute('filter');
if(callback != undefined)
callback();
});
};
$.fn.customFadeTo = function(speed,to,callback) {
return this.animate({opacity: to}, speed, function() {
if (to == 1 && jQuery.browser.msie)
this.style.removeAttribute('filter');
if (jQuery.isFunction(callback))
callback();
});
};
})(jQuery);

<a href="http://stackoverflow.com/search?q=jquery+fadeIn+IE">Stackoverflow.com search for "jQuery fadeIn IE"

If you can't find anything I'd post a new entry. Stackoverflow has been incredibly helpful for me, especially with advanced jQuery scenarios like this.

Best of luck and thanks for posting!

Cheeeeeeeeeeeers!

That's too bad — and I've heard such great things about 7. I have a copy of XP and the issue seems to be fixed for both examples on IE8 (even the bad). Until I get a copy of Windows 7 loaded up on VMware I don't know how to help on this one. In the mean time if you or anyone else find's the cause/solution please let everyone know.

IE's always surprising me.