The remainder is $4$, but $8.5$ does not mean that the remainder when dividing by $8$ is equal to $5$.
The decimal point means that whatever number follows is the number of tenths in the answer, so $8.5=8+\frac{5}{10} = 8 + \frac12$. This is the correct answer because, when dividing $68$ by $8$, you get $8$ and a remainder of $4$, and if you divide that remainder by $8$, you get $\frac48 = \frac12$, meaning that $68 / 8 = 8 + \frac42 = 8 + \frac12 = 8.5$