You can't use RadAjaxManager in collaboration with RadUpload. RadUpload cannot upload files using AJAX calls. This is a limitation of the XmlHttpRequest component, used in all AJAX frameworks for asynchronous calls to the application. In order to upload a file your application must perform a full page postback. Please take a look at the following link
for more information on the topic.
Alternatively, you can take a look at the new RadAsyncUpload which is capable of uploading files using AJAX calls and that can be ajaxified using RadAjaxManager. You can see the async upload in action here.
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