After closer investigation, the only difference between my IE8 and client’s IE8 was a CO, installed using IEAK8 (corporate shit) and it had by default native XMLHTTP disabled. Translated: jQuery was assuming the browser is IE6.
To fix this issue, enable XMLHTTP in IE7, or IE8
1. Open IE8 2. Go to Tools -> Internet Options -> Advanced 3. make sure "Enable native XMLHTTP support" is checked 4. Save