It seems that it is a z-index issue, but when it comes to IE7, the solution for the issue might not be so straightforward. Please take a look at this post and try out the suggested approach - http://therealcrisp.xs4all.nl/meuk/IE-zindexbug.html
In case it does not work, however, I would like to ask you for a live url where I can inspect the issue and come back to you with a suitable solution?
the Telerik team
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