How does $(document).ready() work in IE 8?

Try turning this.

<script type="text/javascript" src="~/Scripts/jquery-1.3.2.js" />

Into this

<script type="text/javascript" src="~/Scripts/jquery-1.3.2.js"></script>

With current XHTML strict standards:

Even when src is specified, the script tag is not an empty tag, and cannot be written <script src=".... />. If you include the src you should not include any script between the opening and closing tags as browser handling of any script between the tags is not reliable.

Basically, do not self close the tag. Use </script>.