I just ran the following as administrator
stsadm -o setproperty -pn developer-dashboard -pv ondemand
The operation completed successfully. I see the icon to the right of my name and attempt to toggle the view. When I click the icon, the screen flashes and nothing else happens. If I set
stsadm -o setproperty -pn developer-dashboard -pv on
Then, the dashboard shows with no problems. This is Win7 IE8
Cheers.