I have discovered the exact same problem.
I have a radgrid filtered by a (Hospital) combobox. If the filter only returns 1 matching item and then I modify the Hospital in that record (effectively removing the match) I get the error:
Sys.WebForms.PageRequestManagerServerErrorException: Selection out of range when I return to the grid. This does not occur when there are matching items left.
The relevant RadGrid code is:
My SQLDataSource is:
The edit function is being performed in a RadWindow (different page) and when the window is closed a JS function rebinds the grid.
I did some testing on the other filters and discovered that the error only occurs when filtered by a RadComboBox (ie: if i filter by date and then change the date on the only matching record, the grid correctly shows the No Records Template).