According to 3DMark2001, this is what a Radeon 8500 supports:
AGP Texturing
Additive Texture Blending
Anisotropic Filtering
Bilinear Filtering
Cube Mapping
DXT Compressed Textures
Dot3 Texture Blending
Edge Antialiasing
Environmental Bump Mapping
Environmental Bump Mapping With Luminance
Factor Alpha Blending
Full-Screen Anti-Aliasing
Hardware Transform and Lighting
Mipmap LOD Bias Adjustment
Multiplicative Texture Blending
N Patches
Point Primitive Support
Point Sampling
Positional Lights
Projected Textures
Range Fog
Rendering to a Window
Specular Gouraud Shading
Stencil Buffers
Subpixel Accurate Rasterizing
Subtractive Texture Blending
Texture Alpha Blending
Texture Clamping
Texture Mirroring
Texture Wrapping
Trilinear Filtering
Vertex Alpha Blending
Vertex Fog
Volume Textures
I believe that Volume Textures includes Volumetric Lighting and Volumetric Fog, so yes, the Radeon 8500 supports Volumetric Lighting.