Why would a Jaguar XK8 window lower in increments as the convertible top is lowered and also fail to go all the way up when the door is closed?

Try re-learning the window regulators. Do this to both Windows one at a time:

Open the window all the way, do not let up on the window switch. Keeping it pressed down you will hear a faint "click" inside the door. Now release the button and do the opposite- raise the window all the way to the top. Do not let up on the window switch until you hear the faint "click" inside the door. Now do the other side...this usually fixes 90% of your window timing issues on an XKR or XK8.