I’ve just upgraded to Live Messenger 8 with the IE toolbar and immediately had a problem after installing where Internet Explorer (i’m running 7) crashed upon opening. A real pain in the butt!
I seem to have overcome this immediate problem, though it seems there may be many more! To fix my IE problem I disabled file sharing in Live Messenger. To do this go to Tools>Options\Shsring Folders\ and uncheck the sharing folders box. You will have to restart before the problem goes away. Please note: after you restart, if you go back and check the sharing folders box and apply the setting, you will have to uncheck it and restart your computer again (or so its seems).
Here’s a link to a great deal of info about this problem with Windows Live Messenger which you may find useful! I did!!
This has been a royal pain in the arse and wasted a good hour of my morning! Good luck.