I was able to solve this problem by following these procedures:
but the online documentation is NOT correct. I'm running R3 2018 (2018.3.910.45) and this was the first time I've ever installed UI for ASP.NET AJAX (not an upgrade) ... the documentation suggest this problem was actually fixed in 2018.1.215.2 but obviously it was not fixed as I'm running with a more recent version.
I did copy the Telerik.Web.Design.DLL to my project's BIN folder, but that also required that I exit VS 2015 and restart VS 2015 with my project ... then I no longer got this error.
Is there going to be a corrected fix for this? It's a rather obvious bug and will hit developers as soon as they try to use any telerik controls and switch to design view.