Could you please confirm that you are using Q1 2009? Today we are releasing Q1 SP1, so if you are using an older version you could upgrade to the service pack.
As for the problem itself, it very likely comes from a global CSS that you have on your pages. Some of the decoration approaches have limit in IE and can get into conflict with other CSS on the page.
That being said, no immediate improvement is possible for IE, so you might need to disable textboxes from decoration by using the ControlsToSkip property.
the Telerik team
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