Any distribution from a retirement plan is classified as income whether taxable or not. Being classified as income just means that it needs to be shown on your tax return. Nontaxable amounts will be included on Form 1040 line 4a or 5a depending on the type of retirement account (4a in this case since the distribution was from an IRA) but excluded from the taxable amount on line 4b or 5b. Only taxable amounts affect anything else on your tax return.
Be sure to click the Continue button on the page that lists the Forms 1099-R that you've entered and, when asked, enter your basis in nondeductible traditional IRA contributions from line 14 of your 2008 Form 8606. (I assume that there were no intervening nondeductible traditional IRA contributions or traditional IRA distributions that would have required a Form 8606 that would have a more up-to-date basis value that you should use instead.)
