A: 

It works for me in IE. Try it out with this jsFiddle.. Not sure it's the best slideshow.

I would put the object property name and values in quotes, just to avoid any possible variable name clashes. So I would wirte

current.animate({"opacity": "0.0"}, 1000).removeClass('show');

and not ...({opacity: 0.0}, 1000)...

Also, don't use eval for you setTimeouts, just use a function reference or an anonymous function. So I would write:

var timer = setInterval(gallery,speed);

and not ... setInterval('gallery()',speed);

Not sure what your CSS positioning looks like, but it seems like that'd be tricky with this slideshow.

Peter Ajtai
A: 

ie is a pain. Why don't try with ie tags?

http://www.quirksmode.org/css/condcom.html

It worked for me on CSS, sure it can work with JS.

chepe263