You are correct and this is indeed a bug on our side that we have fixed now. The fix for this will be available with our next internal build/service pack. From now on we will be using newid() instead of newsequentialid().
This should not have any impact on your application as currently ddl script is created only for identities of type integer and guid. What this setting does is simply notifies our runtime that this ID will be generated by the database so that it is omitted in the sql statement we generated during inserts.
Please find your Telerik points updated for sharing this bug with us.
the Telerik team