Physics.Raycast not checking layermask properly?

Your code seems good. I have a Linecast written the exact same and it only hits the stuff in the masked layer. I have done this with Raycasts and the mask worked correctly there as well. This also reflects the layer masking example correctly http://unity3d.com/support/documentation/Components/Layers.html. All I can suggest is to recheck your scene. Ensure that the CharacterController being hit is actually on the Default layer and that the CapsuleCollider's transform is named differently. Do you maybe have another CharacterController with that name on layer 8? Try turning off layers to check.

Also, make sure that no other debug logs are sending the message since this one will not fire if nothing was hit. Try something like changing your Debug to read something like Debug.Log(String.Format("Raycast Hit (0) on layer (1)", storedTransform.name, storedTransform.gameObject.layer));