IE8 Issue with prototype and dialog modal box

When loading a Modal box in IE8 with prototype loaded as well as Jquery the modal box display no content and when attempting to resize generates an error in the JS file.

This does not happen on Firefox.

Example Code

<script type="text/javascript" language="javascript" src="http://ajax.googleapis.com/ajax/libs/jquery/1.4.2/jquery.js"></script>
<script type="text/javascript" language="javascript" src="http://ajax.googleapis.com/ajax/libs/prototype/1.6.1.0/prototype.js"></script>
<script type="text/javascript" language="javascript" src="http://ajax.googleapis.com/ajax/libs/jqueryui/1.8.2/jquery-ui.js"></script>
<script type="text/javascript" language="javascript" src="http://ajax.googleapis.com/ajax/libs/scriptaculous/1.8.3/scriptaculous.js"></script>
<script type="text/javascript" language="javascript">
	var $jq = jQuery
//	var $jq = jQuery.noConflict();
	$jq(function() {
		// browse dialog
		$jq("#testupload").dialog({
			autoOpen: false,
			height: 500,
			width: 800,
			modal: true, 
			buttons: {
				'Close': function() {
					$jq(this).dialog('close');
				} 
			}, 
			close: function(){
				$('testupload').innerHTML = '<p align="center">Please wait while retrieving file lists...<br /><img id="theimagepreview" src="/admin/images/processbar.gif" /></p>';
			}
		});
	});
</script>
<input type="button" value="test" id="testbutton" onclick="$jq('#testupload').dialog('open');" />
<div id="testupload" title="test"><p>testing</p></div>