I think I see the problem
You have the following in your question:
Replicate_Do_DB: db1; db2 That is not supposed to be a semicolon-separated list. It is supposed to be a comma-separated list.
My guess is your have this in your slave's /etc/my.cnf
replicate-do-db=db1; db2 The correct way to set this up is
replicate-do-db=db1 replicate-do-db=db2 Please adjust this in the slave's /etc/my.cnf and restart mysql on the slave
Give it a Try !!!
###UPDATE 2011-10-31 15:20 EDT
UPDATE 2011-10-31 15:20 EDT
You may want to clear out the relay log by doing this
STOP SLAVE; CHANGE MASTER TO master_log_file='mysql-bin.000008',master_log_pos-98; START SLAVE; then run SHOW SLAVE STATUS\G and make sure replication is running by making sure you see this
Slave_IO_Running: Yes Slave_SQL_Running: Yes just as you posted in your question