Peter,
One more point to the above. Since I am using Compatibility view settings (Intranet and Internet) the IE8 will initially set itself to a Document Mode of IE7 Standard, however, since I am also setting this to IE8 through my IIS meta switch – through web.config, when you test your IE8 browser on the following link (http://www.jqwidgets.com/jquery-widgets-demo/demos/jqxeditor/defaultfunctionality.htm?arctic) you will have to go through F12 and set the Document mode to IE8 Standards. I just tested, when I do this, even your jqWidgets Demo for jqxEditor displays the same problem of hiding the toolbar.
To summarize:
IE8
Compatibility view settings checked on Intranet AND Internet sites
F12 and through developper tools of browser change the Document mode to IE8 Standards
Then hit any site with jqxEditor
Thanks
Kris