Please, make sure you have registered the chart HttpHandler in both <system.web> and <system.webserver> sections in web.config. The former is needed for IIS 6, while the latter is needed for IIS7 and later. You can find this discussed in more details in this help topic
I would recommend removing the registration of the chart HttpHandler for the web.config file and then using the link in the control smart tag from the Visual Studio designer.
the Telerik team