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Blue screens are sometimes due to virus infections, you can try to make an online scan of your computer with Kaspersky Online and see if there's something on it.
VSE 8.5i with patch 8 works fine for me on a Vista Business computer
Okay, no problem - someone managed to fix it.
Turns out the handy McAfee Total Protection uninstaller leaves several McAfee driver files in windows/system32/drivers which cause the thing to blow up. Apparently it is documented in the McAfee knowledge base, which makes me wonder why they don't rewrite the uninstaller to remove those 5 files...
for reference, they are:
all in the same folder. Delete them, reboot and 8.5i installs fine.
Its god to know if I ever have the same problem