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You can find information about known issues and important changes for the entire UI for ASP.NET AJAX suite in the following pinned thread: Known Issues and Important Changes in UI for ASP.NET AJAX.
Q1 SP2 2010 (Version number: 2010.1.519 and lower)
Problem: The RadScriptManager is incompatible with the Ajax Control Toolkit (Version number 40412 and higher).
The following error appears when controls from the ACT are present on the page:
Microsoft JScript runtime error: AjaxControlToolkit requires ASP.NET Ajax 4.0 scripts. Ensure the correct version of the scripts are referenced. If you are using an ASP.NET ScriptManager, switch to the ToolkitScriptManager in AjaxControlToolkit.dll.
Solution for .NET 4.0 projects: Upgrade the RadControls for ASP.NET AJAX version 2010.1.625 or newer.
Important: Make sure you use the .NET 4.0 build of both Telerik.Web.UI.dll and AjaxControlToolkit.dll
If upgrade is not an option use the following workaround:
Solution for .NET 3.5 projects: Override the references to MicrosoftAjax.js and MicrosoftAjaxWebForms.js to point to the ACT script files.
The script files are obtained by building the ACT from source. Sample project, including the scripts for version 40412, is attached in the related forum post: FIX: RadScriptManager compatibility issues with Ajax Control Toolkit