David Conner here. I am a Senior Escalation Engineer on the IE Core and SDK team in Microsoft Support. If you’ve installed the IE 8 Beta builds or the Released build and tried to open a WebDAV share via the File | Open dialog, you may have notice that the checkbox to “Open as Web Folder” is no longer in the dialog as it was in IE 7 and previous versions of IE. In IE 7 we did a bit of work to separate Internet Explorer from the Windows Shell. This work is described in the KB article at this here (KB928675). Below are comparisons between the IE 8 and IE 7 Open Dialogs:
IE 8 Open Dialog
IE 7 Open Dialog
You can still open Web Folders in Explorer. One way to do this on Windows Vista is to
1) Click Start
2) Click Computer
3) In the following dialog click Map Network Drive
4) On the Map Network Drive dialog, click "Connect to a Web site that you can use to store your documents and Pictures" this will pop up the "Welcome to the Add Network Location Wizard".
Until next time!
The IE Support Team