Thank you for your post.
Could it be that your Fiddler is configured to decrypt HTTPS transfers?
I just double-checked that the services the web installer refers to are HTTPS only, hence my question.
All the best,
the Telerik team
Consider using RadControls for ASP.NET AJAX (built on top of the ASP.NET AJAX framework) as a replacement for the Telerik ASP.NET Classic controls, See the product support lifecycle here.