It has been many years since I played this game but I remember getting a save game file that allowed you to begin the game with a dragon as your starting hero. I did notice a .rar file that gave you all races option but the file is no longer found when I do an internet search.

Does anyone recall this save game or where I can locate it?

someone posted in this post a save editor you could use it to edit your starting character to be a dragon

https://www.gog.com/forum/might_and_magic_series/editor_for_might_magic_8

This site has a savegame option for red dragon and green dragon:

http://www.portailsmm.com/comm/downloads.html

I have wanted to try this, but I am new to a lot of modern gaming stuff... I thought the saves needed to be on games downloaded to the computer, not played on GOG. How would I go about using these saves?

There's an Installation section below the saves, but to summarize:
Download a save. Unzip the save.dod from the .zip file. Move the save.dod into your MM8/Saves directory. Load the game.