I know this is an old post, but there is another possible explanation for anyone who comes accross this problem. If you have two CD drives, first load up control panel, and open Multimedia. Select the CD Audio tab and see what drive is shown. Try running FFVIII from that drive, if it won't run in that drive, simply change to the other drive on the CD Audio tab and it should run fine.
This happened to me, FFVIII won't run in my CD-RW (F:\), and the CD Audio tab said (F:\), I changed it to (E:\), my normal drive, since that is the only drive the FFVIII recognises the cd in, and Eyes On Me played properly.