Using Editor from the demo, but the ImageBrowser is not rendering the UI to select files. Instead it prompts to enter a URL (see attached screenshot)
Looking at the source the Html.Kendo().Editor helper generates it appears that the ImageBrowser properties are ignored and not included in the AJAX call to open the editor.
@(Html.Kendo().Editor()
.Name("editor")
.Tools(tools => tools.Clear().InsertImage().InsertFile())
.ImageBrowser(imageBrowser => imageBrowser
.Image("~/Content/UserFiles/Images/{0}")
.Read("Read", "ImageBrowser")
.Create("Create", "ImageBrowser")
.Destroy("Destroy", "ImageBrowser")
.Upload("Upload", "ImageBrowser")
.Thumbnail("Thumbnail", "ImageBrowser"))
.FileBrowser(fileBrowser => fileBrowser
.File("~/Content/UserFiles/Images/{0}")
.Read("Read", "FileBrowser")
.Create("Create", "FileBrowser")
.Destroy("Destroy", "FileBrowser")
.Upload("Upload", "FileBrowser")
)
)