RadScriptManager/RadStyleSheetManager's OutputCompression property currently works always with or without CDN (we will fix it so that it can be disabled with CDN as it now does not work).
Programmatically setting the settings is straightforward - the code follows the structure of the markup you are seeing in this help article
RSM.CdnSettings.TelerikCdn = TelerikCdnMode.Enabled;
Finally, the web.config setting has been tested numerous times on our end and this is the first report that says it does not work. Since we have not made modifications to that functionality since it was created, we should now be looking for another cause. Could you send a sample project showing the issue in the support ticket you have opened on the same subject?
All the best,
the Telerik team
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