Looks like this was fixed in 2.0.7 but ONLY for the basic skin
ie8
ie7 OR ie8 compatibility mode
The fix
Open \var\skins_repository\base\customer\styles_ie.css
Copy everything between /* Previewer styles */
Or code is below
Then replace the code in \var\skins{active skin}\customer\styles_ie.css
/* Previewer styles */<br />
#previewer_overlay {<br />
filter: alpha(opacity=10);<br />
}<br />
<br />
#previewer_overlay {<br />
position: absolute;<br />
height: expression(document.body.scrollHeight > document.body.offsetHeight ? document.body.scrollHeight : document.body.offsetHeight + 'px');<br />
}<br />
<br />
#previewer_window {<br />
position: absolute;<br />
margin-top: expression(0 - parseInt(this.offsetHeight / 2) + (previewer_margin = document.documentElement && document.documentElement.scrollTop || document.body.scrollTop) + 'px');<br />
margin-left: expression(0 - parseInt(this.offsetWidth / 2) + (previewer_margin = document.documentElement && document.documentElement.scrollLeft || document.body.scrollLeft) + 'px');<br />
}<br />
<br />
#previewer_load {<br />
position: absolute;<br />
margin-top: expression(0 - parseInt(this.offsetHeight / 2) + (previewer_margin = document.documentElement && document.documentElement.scrollTop || document.body.scrollTop) + 'px');<br />
margin-left: expression(0 - parseInt(this.offsetWidth / 2) + (previewer_margin = document.documentElement && document.documentElement.scrollLeft || document.body.scrollLeft) + 'px');<br />
}<br />
<br />
#previewer_hide_select {<br />
position: absolute;<br />
height: expression(document.body.scrollHeight > document.body.offsetHeight ? document.body.scrollHeight : document.body.offsetHeight + 'px');<br />
filter: alpha(opacity=0);<br />
}<br />
<br />
.drag-window {<br />
filter: alpha(opacity=0);<br />
}<br />
<br />
/* /Previewer styles */