I am afraid that I can't reproduce the issue you are describing. The image is displayed in both Resource and Content mode. The difference between the two is that when Resources is set the image is part of the dll while Content means that it will be in a folder outside the dll. At run-time the image is loaded correctly in both cases. This isn't changed in the latest builds since the issue does not appear on our side.
Maybe there is some other problem that manifests itself this way.
the Telerik team
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