see http://jsbin.com/umuza3/89/ In IE8 it drags both the nested and outer list items at once in a very strange way. FF and Chrome behave as intended.
Can anyone see a work around for this or is there a way of stopping the events from bubbling (not sure). I have tried some js patches for IE, but none have helped.
It can be solved by setting an option in the outer sortable list (i.e. {handle: "span"}) and wrapping the text (or anything visible) with a span. This seems to stop the strangeness in IE8 and works consistently across browsers.