The paragraph is still displayed under the list element in IE8 for Windows XP when the following is performed:

1. The HTML below is placed in a RadEditor in HTML mode;
<ul>
    <li>This is line 1</li>
</ul>
<p>This is line 2</p>

2. The editor is switched in Design mode;

3. The paragraph is incorrectly joined with the list element by placing the cursor at the start of the paragraph and pressing the Backspace key;

The issue can be avoided by bringing back the old behavior of the RadEditor's commands as described in this help article: http://www.telerik.com/help/aspnet-ajax/editor-inline-and-block-commands-behavior-change.html.