What your code does is that it sends the file to the response object which will naturally result in the download dialog on the client. If you want to view the pdf you only need to change the iframe src to the file's URL. Then the browser will take over and if it has the needed plugins and is configured to do so - it will open its PDF reader in the iframe.
Please note that this is not actually related to the RadWindow, but is the general way things work. If you want to show the pdf in the RadWindow simply change its NavigateUrl and again the browser will decide what to do with the file sent to the iframe of the RadWindow.
Please also note that you need to pass a valid URL that can be opened on the client as this is where the src of the iframe is applied.
the Telerik team
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