Why do “my favorites” now line horizontally along tool bar instead of under “favorites” tab?
All you favorites still show up under the favorites tab. The horizontal bar (new with IE8) is called the Favorites Bar and its entries are saved in the regular favorites list under the folder Favorites Bar. You could turn off the Favorites Bar by right clicking Tools and on the list of toolbars click Favorites Bar. Use the star with the green cross and not the star with the green right arrow to get what you want.