Hi,
This is not a license issue. This is a security feature introduced by IE 8. IE 8 intentionally change the path to "fakepath" so that when the file is transferred to the server, the server side code would not see the full path of the client side file. The feature is only activated when the file is in Internet Zone. If you move the site to Trusted Zone then you should see the real path.
The obvious problem for this security feature is that it freaked a lot of end users out. Another problem is user is unable to see and verify that they indeed have selected the right file. So I am not sure why Microsoft decided to do that. But in any case, it should not affect the file uploading. You should still be able to upload the file and get the file name, except that you can not get the full file path.
To avoid user from getting confused by seeing the "fakepath" file name, you can customize the uploader to hide the text box part completely. In order to do so you will need to connect an uploader with a toolbar button. Your user would then select the toolbar button to browse and upload a file. You can find a working example about this feature at here:
http://demo.essentialobjects.com/Default.aspx?path=AJAXUploader\uploader_toolbarPlease feel free to let us know if you have any more questions.
Thanks!