Did you open the RadWindow in the page loaded event? If not then this is the default behavior of RadWindow - when loaded RadWindow remove it self from the layout. Then when Show
method is called RadWindow shows inside of Popup.
Please note that you call Show or ShowDialog in Page Loaded event (no earlier) or RadWindow won't work (this is Silverlight issue with popup control).
Let us know if you need more information.
the Telerik team