From the Telerik documentation, it states that I should be able to add a FilterTemplate to a GridTemplateColumn (and not have to create a custom column.)
However, when I do this, I get the following error:
I guess you are trying to implement FilterTemplate with RadGrid for asp.net version. FIlterTemplate is available with RadGrid for asp.net AJAX version. Filter Template
Since the stack trace of the error indicates that the Telerik.WebControls namespace is referenced, you use the Classic ASP.NET version of the grid. The filter template feature is introduced in the Q1 2009 version of RadGrid for ASP.NET AJAX. I suggest you migrate to the latest release 2009.2.826 to take advantage of it.