I had the same problem, but it showed up at some point during my development. Due to something else I was working on, I added the assembly Telerik.Reporting.ImageRendering and I *think* that is what made it show up because the docs say that in order to use the Render function, you have to have that assembly referenced.
If you are using a Web Site project (not Web Project in VS 2005 SP1), then you may need to manually specify the folder in which the
"PDF" rendering extension is located using this code line: Telerik.Reporting.Processing.ReportProcessor.ExtensionDir = HttpContext.Current.Server.MapPath("~/bin");
Also, make sure that Telerik.Reporting.ImageRendering.dll resides in the Bin folder of the application.