Basically, there should be no difference whether you use LinqDataSource control or attach the NeedDataSource event and pass LINQ query inside the handler. Can you please verify that you are using the latest Q2 2008 release of RadControls for ASP.NET AJAX (2008.2.723) in your project?
If the problem persists, I will appreciate if you isolate a stripped working version of your project and send it enclosed to a formal support ticket. I will test/debug it locally and will get back to you with my findings.
the Telerik team
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