Try using a Web proxy tool like Charles, to capture the request and response between the browser and the server and see what request headers are being sent to the server. From your initial post, it looks like the browser is sending across a HTTP/1.0 requests across to the server. Streaming channel requires a HTTP/1.1 protocol for communication.
PS. BTW, as per the attached image, I don't know what locale you are using, but certainly the English locale IE 8 browser Internet Options looks a lot different. I can't read what checkboxes have been selected in the dialog.