Could you elaborate more on the problem that you are observing? What do you mean by "RadAjaxManager hangs"? Is the loading panel not hidden or is it another issue?
I used the code provided in your post and created a sample project where the controls seem to be working as expected on my side. The RadAjaxLoadingPanel is displayed over the updated control for a short time. The only modification I made was to increase the MinDisplayTime value so the loading panel is clearly visible.
Give the attached project a try and check if it is working for you.
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