When updating such container controls (like the RadToolTipManager) via the AJAX settings you would indeed get nested update panels. What I can suggest is that you use a regular asp update panel to wrap you UC and set its UpdateMode to Conditional. This should eliminate the issue from the nesting of the panels.
. This approach can be used to cover the entire UC by setting the proper target for the RadAjaxLoadingPanel (i.e. the entire panel and not the AJAX initiator).
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