Before you begin, I would highly recommend using Advanced Data-binding (Using NeedDataSource Event) or Declarative DataSource technique to bind data. In those case, you will need to ensure that .DataBind() method is not called anywhere as it my cause unexpected behavior.
As for the complete scenario, there are many ways, and since I am not aware of the current setup you are using, I will point our several directions you can look.
Updating a record can be done in different ways, again it depends on the data binding technique:
Collecting the values from the drop down can vary depending whether you use GridDropDownColumn or GridTemplateColumn, and also depends on the way is used to editing/updating records.
Of course, when doing things manually, you will might want to know how to access objects, items, cells, and more: Accessing Cells and Rows.
To do things in different events: Distinguish Edit or Insert Mode
To provide you with a more accurate answer, I would need to know more about how the grid is bound, the columns used, data bound to dropdown, how the CRUD operation is done, etc.. The best would be if you share the markup and code behind related to RadGrid. That would give me a good idea on what you have now and allow me to advise you accordingly.
I look forward to hearing from you.
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