I have been running 8.04 at work using wubi and it has been working like a charm since the last 6 months.
However, I just ran into an issue where after a reboot, instead of booting, it dropped me into a busybox prompt. The problem was that grub could not find the initrd, probably due to a few _corrupted_ disk sectors where wubi had my Ubuntu image installed.
Simple fix, boot into Windows (hopefully that still works) and run 'chkdsk' on the drive.
Oh well, the price you pay for not giving yourself a dedicated partition.
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