This is really cool!!!

Over at Xencode, the makers of an application virtualization product called "Virtual Application Studio" has a beta out for Internet Explorer 8 running in a "virtualized application mode". Go to: http://www.xenocode.com/Start/?a=IE8 and click on the Install link in the top right corner of the image. This will install, what they call a Sandbox Manager. It is a onetime installation and it is not browser specific.

Once installed, you may need to reload the page. Click on the green power button. The application virtualized package is streamed to your computer and starts to run and ... Boom! You have an application virtualized version of the IE 8. Since the application is not installed on your machine, will need to visit the site again to use the IE 8 image. Also, I am unsure about your privacy when using the streamed browser instance - so don't ask!

But wait it gets, better. Your new IE 8 instance will have access to your local resources on your PC. The history and cookies are all available, even the Adobe Flash and Reader plugins work in embedded mode. You will run into some issues (IE 8 warns) that some plugins are not compatible with it, like the IE Developer Toolbar. But that is ok, because the new developer tools in IE 8 work.

After some quick testing, the virtual IE 8 instance works really well. Performance is good.

They also have virtual instances for Firefox 2 & 3, Chrome, Opera, Safari and IE 7 & 6. Check out: http://www.xenocode.com/Browsers/