Hello, 

On top of my head, I suggest this is because you are executing your code before the page is finished loading.  Either move your script include/script block to the end of the doc before the closing body tag or if you are using jQuery, place your code in a ready function like this. 

$(function () {

    var vm = new ViewModel( 'Joe', 'Schmoe' );

    ko.applyBindings( vm );

});

http://jsfiddle.net/bczengel/27gcs/  

And yet as your code seems to be working elsewhere but in IE8, I suggest there could be some issue with how IE8 handles self-closing script tags. For example:

Try turning this.
<script type="text/javascript" src="~/Scripts/jquery-1.3.2.js" />
Into this
<script type="text/javascript" src="~/Scripts/jquery-1.3.2.js"></script>

Please let me know of this long shot does the work!