Try adding a set of quotation marks:

{ IF "{ LINK Excel.Sheet.8 "C:\\Documents and Settings\\*FAKE FOLDER\\FAKEFILE.xlsx" "Sheet1!R2C1:R2C3" \a \f 4 \r \* MERGEFORMAT }" > 0 "Field1: { LINK Excel.Sheet.8 "C:\\Documents and Settings\\*FAKE FOLDER\\FAKEFILE.xlsx" "Sheet2!R1C1:R4C4" \a \f 4 \r \* MERGEFORMAT }
" "" }

Otherwise, when I debug or build IF fields, I start out simple with only the IF field.
{ IF "test" = "test" "true" "false" } and make sure I get the expected result. Then step by step I substitute in what I want to use until I have a complete working IF field.