The behavior which you are experiencing is due to the fact that WebImageViewer control has overriden Visible property. This property is internally used by RadAjax infrastructure in order to wrap ajaxified control inside UpdatePanel.
To workaround this behavior you can wrap WebImageViewer control instead regular ASP.NET Panel control and set that Panel as UpdatedControls instead of the viewer itself. Other options could be to user RadAjaxPanel instead of RadAjaxManager. For your convenience I am attaching sample application demonstrating exactly this scenario.
I hope this helps.
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