If you have any mods, you need to delete them.  If you are playing an old save from 1.07, you need to give up on it and start a new game.  I had the same problem.  Icecrowns mod was the culprit.  It is not compatible with 1.08 because of the way the mod works.  He didn't just change the spell graphics but also copied all the spell information from 1.07 and made it a part of the mod itself.

Fireball was working well for me in 1.08, though I haven't tested with the b patch.

 That would indicate the problem was the damage was simply too low compared to the target's defence. Upping the intelligence increases the minimum damage, the higher this is the better the chance of hitting.

Generally speaking, with 10 intelligence and no shrine I was hitting the lower level bandits for 30 damage (against their 2 - 4 hitpoints), but once they started appearing with decent (i.e. some) defence it was less effective. Till I got a fire shrine, then I was armageddon incarnate.

In the game I finished up last night, magic worked very well, I hit 98% with flame dart, fireball,firesorm, hurl boulder. I had a few misses with firestorm over an area against some units. I did not check its stat, figured it had a very good defense. My magic worked very well (I had one of the fire shards), the problem I had was I was up against new units I'd never seen before (riduculous difficulty, large map, max # AI, no mods): 10-man catapult squads with 800 hp, 100atk, 10def and deukallion (something like that) a Rothkar empire recruited monster with 1,120 hp, 24 atk, 24 defense. I used dozens of fireballs & firestorm from 3 channelers and was only able to reduce hps by 30/40% at best before my mana ran out .. very obviously a new "magic soaking" monster (was not in the hiergamenor & I've never seen it before in any other game).

By the way, units are moving *much* faster in tactical combat on my system (windows 7 64 bit, 8gb ram) in the 1.08 patch, kudos for that. I only had one out-of-memory crash that whole game. The only real problem I had was the AI attacked a couple of my cities in the course of the game and not all my units were appearing for defense, in each case I had no more than 5 units, so they should've all appeared on the tactical battlefield. I was able to creativly "block" pioneers, from a friendly AI that I had an alliance, from settling areas I wanted by positioning useless single man scouts in such a way that the pioneer could not pass .. perhaps alliance units (and your own units for that matter) should be allowed to pass over other friendly units on the strategic map. The friendly AI just kept spawning new pioneers when the others got blocked.

By the way, my fire using giant was able to use his spells & mana well too, but those things always have such little mana that I've never been able to cast more than one fireball from a fire giant in any one battle, so I generally don't understand the complaints that giants are "too powerful" since they're always just a one-shot deal. I rely on them more for combat power in the early game when you need that, which is probably the designers intent.

I'd guess that there are too many different types of systems, configurations, and everything else for everything to work properly on everyone's system given the (too) wide array of possibilities involved.

I have games that I have cannot even play on my old computer. The games are just flat-out broken on my old system (I recently bought a new computer in July), and conversely I have older games that I still really enjoy a lot that I cannot load on my new system (they're broken on my new system). I spent a lot of tech support time with two recent purchases (4/5 months or so ago) on my old system & I was never able to the games to even work, unfortunately this has been becoming more the "norm" in my experience over the past decade (at least 1 out of 10/12 games I bought over the past 10 years doesn't even work & I've been unable to get them to work). Those same two games loaded without hitch & worked on my new system. What did I learn from this? : it's better not to buy newer games for older systems.

I actually have one new game that I bought earlier this year that won't even install on either of my computers (Elf something, supposed to be a 4x strategy similar to EWOW). It's just completely broken. In fact, I'll go so far as to say that I'm surprised that any game works on any computer on any gamer's system given the wide array of configs possible. Basically, I've just generally noticed that games simply don't work as well as they used to in comparison to games made in the late 80s early 90s, modern quality is inferior (in so many ways, not just this). It's disappointing, but it doesn't surprise me when you consider all the factors.

p.s. Yes, I did buy the correct games for my system (they're not mac game on a windows system).

btw: This is not just games. I went through a minor hell for a two-week period trying to get all my (older) hardware to function on my newer system when it arrived back in July. I was not even able to get a basic connection to the internet for over a week with my new windows 7 system. I spent days talking to tech support in India. Dell even had a guy come to my house and replace the entire "motherboard" (and most of the related hardware). We're talking about reconstruction from ground up .. that didn't fix the problem. Eventually, one of the tech support guys (I talked to sooo many for so long, when I say minor hell I mean it) figured out that the firmware of my router (which was a pre-windows 7 router) was incompatible with the windows 7 64 bit system. I had to reinstall the firmware on the router and completely overhaul all those stupid numbers: encryption key, transmission key, WEP number ... man, I'll tell ya, put's a whole new dimension on the phrase PITA. I went through similar pain with my printer (all in one) before getting it to work & even my microphone. It was a struggle just getting mundane things you take for granted to work. Than god it was just a one-time (two-week long) thing.  

Bows and several spells are just plain broken in 1.08b.
They are broken for the same reason.

Not all spell and ability XMLs were rewritten to use the new (and better) format for damage and old savegames can not use the new system, either.
Some spells (all fire spells, for instance) were properly updated.

There is no need to verify or test this any further.
The devs already know about it and repeating this doesn't get it fixed any sooner.

I've started a new game too.  No spells hit in combat for me yet, but they seem to work in auto resolve since the log indicates that they did.