RadAjaxLoadingPanel is displayed during AJAX requests over the currently updated controls
, depending on the AJAX initiator and list of updated controls defined in the RadAjaxManager's AjaxSettings.
In your code snippet there is no AjaxSetting, which defines RadAjaxManager as an AJAX initiator and no controls, which should be updated by the manager. That's why the loading panel doesn't show.
The online demo, provided by Serrin above, demonstrates how to define RadAjaxManager as an initiator:
<telerik:AjaxUpdatedControl ControlID="lblDescription" />
In your case, maybe you don't have a suitable element to ajaxify by the RadAjaxManager, so an alternative option is to display the loading panel explicitly over the whole page (use the form ID as a parameter of the loading panel's show() method):
the Telerik team