So I am running DNN 5.1.1 and up until I upgraded the fckeditor was working fine. I did a clean install of 5.1.1 and used a template of my previous installation to get all my content back and navigation. Once doing so and then trying to edit content using the fckeditor ine IE8 standards mode the control panel functionality does not work properly. I can click on buttons and they will show a popup like its supposed to but then I click OK and it doesn't go away. None of the Style, format, Font or Size  drop downs work at all.

If I change the display mode to IE7 Standards I get something that I just cannot work with at all. This is with Browser Mode: IE7 and Document Mode: IE7 Standards.

As you can see, this just doesn't work. I can't put this into production like this. Has anyone come across this and know how to fix the functionality? Everything works fine in FF and Chrome.

 Can you re-post the image, the link above appears to be broken.  Whose/what skin are you using?  Also, do you have any modules installed that enhance performance, SEO features, or advanced URL rewriting for DNN?

did you try it with default Skin and container applied?