I suggest you to check if the IE compatibility mode is enabled. With the compatibility mode enabled, the browser might have different features supported regarding pasting of images in editable containers.
Pasting in the editor is handled entirely by the browser when it comes to images copied from HTML documents or base64 data stream from the clipboard.
If the images are pasted from an MS Word file, again, they are pasted with a data:base64 string. This should work out-of -the-box and there is nothing to configure in order to be supported. Note that this feature should be also supported by the browser.
If, however, the scenario is with pasting an image file directly into the content area, this is a matter that entirely dependents on the browser. You can find a possible solution in this SO thread—http://stackoverflow.com/questions/13698109/how-can-i-paste-an-image-from-the-clipboard-to-kendo-ui-editor
Also, you can try replicating your configuration in this Dojo (http://dojo.telerik.com/ELEgo
) and see if you are able to reproduce the same behavior.
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