Been there...done that...got the T-Shirt!
The Linux drivers for ATI graphics cards leave a lot to be desired; when properly installed, the fglrx driver from ATI does a great job. Unfortunately, that will take a little work.
WHAT YOUR PROBLEM IS: The 'ati' and 'radeon' drivers linux loads don't work above 640x480 with 16-bit colors. I don't know why (maybe someone a lot smarter than me can explain it); I do know that to get them to work, during the install process, I had to select the lowest video settings to get X to start. I could then go through the fglrx installation joys.
WHERE YOUR PROBLEM IS: The file is xorg.conf in the /etc/X11 directory. It is a simple text file that can be edited at a command line prompt.
1. Put the FC8 DVD in and reinstall, this time select just the rudimentary video settings it takes to get it to start. Next log onto http://rpm.livna.net/rlowiki/;
click on "Fedora 8 repository RPM". This will lead you through a simple installation process to add their repositories to Fedora's Yellowdog Update Manager (YUM). Then, open a terminal, 'su' to root and type: yum install kmod-fglrx. Reboot the computer and change the video to what you want--everything should work.
2. Put the FC8 DVD in and select Rescue mode. When it gives you the option, type "chroot /mnt/sysimage" (or whatever it tells you your system is mounted to). Next, type "startx" and follow the procedures in Step 1 about adding the livna repositories and install kmod-fglrx.
3. Edit the video portion of xorg.conf, changing the module="ati" or module="radeon" to module="vesa" and reboot the computer. This is the basic graphics driver that does 2d graphics as well as any other. If you are not gaming, this is actually a perfectly fine driver. If, however, you want to game, you will need to follow the directions above that install the fglrx driver.
Be careful about option 3; many Linux text editors are not as easy as you may be used to. You will find many post extolling the virtues of Vi (or Vim); I would offer other assessments of them. Ed or Jed should work better if you can get them. I think Fedora offers one or both of them in Rescue mode--check their website.