I'm using a FormTemplate for editing, and if I set the PopUpSettings-Modal="True", the browswer windows shows horizontal and veritcal scrollbars.
Your demo @ http://demos.telerik.com/aspnet-ajax/grid/examples/dataediting/popupeditform/defaultcs.aspx does the same thing, It shows the horizontal scroll when the edit form is shown.
If PopUpSettings-Modal='False", the scrollbars don't appear.