The most probable reason for the broken design time is that you have wrong version of Telerik.Web.Design.dll
in your web site's bin folder.
I guess that after you installed the latest RadControls for ASP.NET Ajax you upgraded your website to use this latest version. If not then go ahead and upgrade it.
Now open your web site's bin directory and make sure that Telerik.Web.Design.dll
assemblies have the same version (2010.3.1109
in your case). If this is fulfilled then rebuild you web site and see if the design time is fine.
the Telerik team
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