I tested the provided project by replacing the Telerik controls with a simple Asp:Button control placed in an update panel:
and Error: 'Sys' is undefined
. I also examined the page with Fiddler and Firebug and noticed that in the Response Headers
. The correct value is gzip. You can see my test in the following video: http://screencast.com/t/nRuceqUtoGoK
Your custom code in the Global.asax breaks the Ajaxification of the page. Since this is a general knowledge issue, which is not directly related to Telerik controls, my suggestion is to search in Google and ASP.NET AJAX forums for a solution for it.
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