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If the files started life in version 3, this seems like a perfect opportunity to rebuild the entire system from scratch in either 11 or 12. You have the old system as a reference, so that should considerably cut down on development time. Sell the client on the myriad of features FileMaker has added since version 3 and even since version 8.
The end result will be a nice clean new system.
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While there are one or two very subtle context changes in a script step or two in going from v9 to v11, we've had zero problems moving from v8 to v11. This includes hundreds of databases and 30 - 40 clients. The biggest issue was the status bar change from the side to the top, which disturbed some of our clients and required modifying a few layouts. The more powerful programming tools added in 9, 10, and 11 make the upgrade well worth it, particularly if the files are still being developed. I also have much more confidence in the v10 & v11 recovery process (see next).
Regarding corruption, we're had great success using an approach suggested by Bob Shockey (Alchemy Group in LA). This involves running a full recovery on a COPY of the database, reading the log and then correcting the referenced error(s) in the original file. We do this until the a copy of the original file goes through recovery with no reported errors. This allows us to correct the errors in the original file without recovering it directly. In each case recently (since v10) where we have encountered a misbehaving file that reports a recovery error, we've been able to get it back to a "clean" state, without actually running the recovery process on the original file itself. While not a technically "perfect" approach - that would involve never working with any file reporting errors - I'm much more comfortable working with a file that has never had the fairly invasive Recovery procedure run on it, and have had no subsequent problems with any of the files on which we've used this technique.
And finally - while this is heresy in the perfect world - I'd be much more comfortable working with a recovered file that at least appears to function correctly, than a file that is misbehaving and has known errors in it. I've been handed files from clients that have been recovered many times, and then work perfectly for years. Note that I am not recommending this; just mentioning it as a last resort. This could also be viewed as a stop gap while you re-write the system.
Can anyone point out why they should stay with 8? especially v2?
Don't stay there. There is nothing special about v8. Development tools are vastly improved in newer versions.
Also, can you recommend automated software to fix the widespread file corruption in their system? Or, is a more hands-on approach using FileMaker 11's consistency checking and more robust recover the best way? Steven Blackwell's well written white paper on file recovery has been very helpful to us in guiding our approach so far.
I would recommend rebuilding. You don't want to put any effort into a corrupted system. If you are rebuilding take the opportunity to build in v12 using the new file format. I don't know of any automated software for the job and you wouldn't want an exact replica anyway. You'll want to do things using the new methods. There are better tools in v12 than in v8: new hoops with bigger diameters and lower to the ground
No reason to stay with 8, In my previous position where I managed 2 large FileMaker Servers we had users that hadn't upgraded in years and were still on versions 7 or 8 and others running the same systems from 9, 10 or 11, only a few systems did we need to force upgrades (we just checked the version in a startup script and provided them with instructions to contact the Help Desk for an upgrade).
As for the corruption in their system, this as well as the fact that the system was designed pre version 7 really scream that it's time to rebuild. You can take better advantage of the new filestructure (introduced in version 7) that was probably missed, plus with the changes over the years there are many more features that can be taken advantage of. Plus once there is corruption in the files you just can't be sure it's all clean and won't pop back up later, it's best to start with a fresh file.
I know version 12 is brand new, but since it sounds like this company doesn't upgrade often, it may be worth taking the plunge and moving on to 12 to be on the new filetype.