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Which elgg version you use ?

The latest stable version is Elgg 2.3.10 (https://elgg.org/about/download)

And elgg 3.x is under development. Hopefully a stable version for 3.x will be released shortly. but for now you can use the 2.x branch.

I think there won't be a huge improvement in ranking even with a newer Elgg version. But it's worth a try and as you would be able to use some SEO plugins that are not available for Elgg 1.8 it might help at least a bit to improve the ranking. I just think that the content on your site might be at least one reason why your ranking might not be that high. Ask yourself: why should people come to your site and then return often to your site? There's some content necessary that they won't find elsewhere and maybe link elsewhere to your site just because they want to tell others about it. But if there's just an endless number of blog postings without any common theme or general value people might not return once they have looked around for a bit - maybe coming to your site by pure chance in the first place. If a site has a specifc kind of content there's a relation between people searching for this specific content and sooner or later also clicking on the search results to a link to your site. If this happens often for specific search terms I would think that the search engines will also start taking this into account and your ranking will improve - especially if your site also gets linked from other sites just because it's content as the links from other sites also get taken into account by the search engines.

Upgrading your site is not a totally easy task but it's not too difficult either. First of all you shouldn't do it in a hurry but take your time for the planning. If there are 3rd party plugins you currently use you would have to find out before starting the upgrade if there are compatible releases of these plugins available for the new version of Elgg. If not, you have to decide if you really need these plugins or looking for an alternative plugin that offers the same functionality (though if there has been any kind of content being created with the use of this plugin it might be not possible to keep this content to be handled by another plugin in future - at least not without some upgrade scripts that convert for example the corresponding the db entries). The theme plugin you use might also not be available anymore on a newer version of Elgg but there would be others.

So, you would have to make a list of the 3rd party plugins with notes about which version of the plugin is working with which version of Elgg and as you can't upgrade directly from Elgg 1.8 to 1.9 you might need versions of these plugins that also work with the Elgg versions in between. Plugins versions written for Elgg 1.9 should mostly work also on 1.10 - 1.12 and plugin versions written for any Elgg version between 2.0 - 2.3 should work at least on the newer 2.x versions respectively (i.e. plugin for 2.3 won't work on 2.0 but plugin for 2.0 should work on 2.0 - 2.3).

The upgrade need to be done in steps: 1.8 -> 1.9, 1.9 -> 1.10, 1.10 -> 1.11, 1.11 -> 1.12. From 1.12 you can directly upgrade to 2.3. Always use the latest versions of Elgg available on the intermediate upgrade steps.

I only did an upgrade of a site myself (from 1.7 even). As by experience the hardest step within the upgrade process was upgrading from 1.8 to 1.9 because there are some complex upgrade scripts to be run on this step (most time consuming was the datadir migration upgrade). But if you do backups of database and data directory at each step (better do it too often than not often enough) you could return to a working state in case something goes wrong.

My suggestion would be to test the whole process with a separate test installation for example on your own computer. Then you can test not only the upgrade process but also try out the newer Elgg versions and any additional plugins you want to use. It will take some time to learn how to do it, then do the testing and then doing the upgrade for real. But I think with Elgg 1.8 you are stuck in any case anyway in the long run as you could either keep your site as it is (maybe hiring a developer to do any customizations if you find one) or try it with upgrading your site.

Buddypress is a feature of wordpress. I am not sure that it is possible via any plugin or by a simple migration process.

You can do a database mapping but that would be a hell of a task. Alternatively you can do an export of all the objects from elgg and check how those object can be imported in wordpress via any custom script. There might be other solution as well but any solution you choose will required a hard core technical knowledge of both Elgg and Wordpress. Even if you find someone with such expertise, do ensure that all the plugin that you were using in Elgg has an equivalent plugin in Wordpress.

For now, all I can say is all the best..!!

From the two choices (updating your site from Elgg 1.8 to a newer Elgg version or migrating the Elgg site to Buddypress) I would think that upgrading to a newer Elgg version is much easier!

With a newer version of Elgg you could also try some plugins like https://elgg.org/plugins/2397576 or https://elgg.org/plugins/2626263 for improving SEO.