Thanks for the screenshots. This helps a great deal. I see that from the screenshots it looks like you are using the Telerik theme. I have managed to reproduce your issue but only using the Telerik Theme.
The Telerik theme is an old theme created before they presented the new theming mechanism and the new Visual Style Builder tool.
I suggest that in this case you take a look at creating your own theme for the TreeView using the Visual Style Builder
Please can you confirm this by trying your code when placing the RadTreeView into a different theme. For example, the default one.
thanks - hope that helps