Excuse me, that thump you heard was me banging my head against a wall. As a first grade teacher in California, I know just what you mean about "No child left behind." I've heard it called "No child left standing." It has done so much to damage education....
An 8-year-old who still can't read is at a HUGE disadvantage, and I would certainly suspect a learning disability. In my opinion, it is unforgivable and downright criminal if your school isn't doing absolutely everything in its power to find and correct the problem. Everyone can be taught how to read. Most kids will learn well enough with whatever program a school has to offer, but the kids with certain kinds of difficulties can ONLY learn with very specific, structured kinds of instruction. It all has to do with how the brain processes all the components of language, and scientists have mapped the differences using CAT scans and PET scans.
Send me a private message if you'd like some suggestions for resources you can try with him.
Okay, enough fuming. Book suggestions:
Hi, Fly Guy! and all its sequels: Shoo, Fly Guy!; The Old Lady Who Swallowed Fly Guy; Super Fly Guy; Fly High, Fly Guy! all by Tedd Arnold. My boys love them--the humor is just twisted enough.
Ricky Ricotta's Giant Robot by Dav Pilkey. It's his easiest-to-read book, and every boy I've ever met LOVES Dav Pilkey's outrageous sense of humor.
He might like the Fox books by James Marshall: Fox in Love, Fox on Stage, Fox on the Job, plus more. They have a very dry sense of humor that make the books seem less "early reader" than they actually are.
There's also a cool website he might enjoy:
http://www.starfall.com/
It has interactive books from basic letter sounds up to folk tales and legends. He can read along with the computer, or he can read by himself and just click on the words he needs help with. If it's a phonetically regular word, the computer sounds it out first, then blends the sounds together. And because it's a computer, it might feel less intimidating to him than a book will.