The solution: CCleaner. The option is there to remove saved passwords, which should override the settings made in IE8 to save them. I never choose save passwords, regardless of what browser I use, for the very reason described in the MS bulletin. It's very dangerous to do so, no matter how much easier to it is quickly log onto sites that I use daily.
Spyware/Malware can take over & clean one out by saving passwords in their browsers.