I am not sure if this is a bug in IE8 but we have found that in certain sites when we copy and paste a password in the password field then IE8 fails to logon to that site. We have experienced this in a Windows 7 machine with Internet Explorer 8.

It seems that if you start typing the user name then you cannot paste the password in the field.

This is how we have worked around this:
1. pasting the password and then typing the username
2. pasting both the user and the password
3. the obvious one, typing both fields.

We have spent various hours trying to figure this out as we have an application that creates users and passwords automatically and we thought that there was something wrong with our AD routines... it turns out that this may be an IE8 bug.

Hope this helps someone and that Microsoft comes up with a fix for this if this is a bug