By looking at your attached image and the information that you provided I can assume that there are some custom styles that might be causing the issue that you get. However, I will need to test it locally and inspect what is the actual reason. Although you can try out commenting the custom styles that you have and check if you still get this appearance my best suggestion would be that you open a support ticket and send me a simplified runnable project replicating the issue.
the Telerik team
If you want to get updates on new releases, tips and tricks and sneak peeks at our product labs directly from the developers working on the RadControls for ASP.NET AJAX, subscribe to their blog feed