I've just answered another ticket regarding the same problem.
Could you please try to test the same scenario with a standard asp:menu and with/without asp:ScriptManager?
I believe it is something specific to the asp:ScriptManager, because the problem disappears when it is removed from the page.
the Telerik team
Registration for Q1 2011 What’s New Webinar Week is now open. Mark your calendar for the week starting March 21st and book your seat
for a walk through all the exciting stuff we ship with the new release!