SHort version:
You need two pieces of software: Desktop Manager (use v4.2) and the HANDHELD OS for you 8700. Download v4.2 of the handheld OS for the 8700 to your PC.
Execute the program you just downloaded to install the Handheld OS to your PC
Locate and delete vendor.XML on your PC C: drive
Start Desktop Manager - it will upgrade your 8700.
GIVE IT SOME TIME - the upgrade can take 30-45 minutes.

You should have a Media Manager on your Desktop Manager; it can move ringtones to the 8700.