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There was a very similar issue to this logged here.
And here is a simple project showing the problem. Notice that when you attempt to enter a <space> in either of the TextBox controls, the first keypress seems to be ignored. Subsequent <space> characters are ok.
<UserControl x:Class="SilverlightApplication61.MainPage" xmlns:telerik="http://schemas.telerik.com/2008/xaml/presentation"><UserControl.Resources> <DataTemplate x:Key="LabelTemplate"> <TextBlock Text="{Binding ., StringFormat='\{0\}:'}" VerticalAlignment="Center" Foreground="Green" FontSize="12" Margin="25,0,5,0" /> </DataTemplate></UserControl.Resources> <Grid x:Name="LayoutRoot" Background="White"> <telerik:RadDropDownButton Height="50" Width="50" DropDownWidth="280"> <telerik:RadDropDownButton.DropDownContent> <Grid> <Grid.RowDefinitions> <RowDefinition Height="Auto" /> <RowDefinition Height="Auto" /> </Grid.RowDefinitions> <Grid.ColumnDefinitions> <ColumnDefinition Width="Auto" /> <ColumnDefinition Width="1*" /> </Grid.ColumnDefinitions> <telerik:Label Grid.Row="0" Grid.Column="0" Content="Field 1" ContentTemplate="{StaticResource LabelTemplate}" /> <TextBox Grid.Row="0" Grid.Column="1" FontSize="14" Text="{Binding Field1, Mode=TwoWay}" Margin="0,4,3,2" /> <telerik:Label Grid.Row="1" Grid.Column="0" Content="Field 2" ContentTemplate="{StaticResource LabelTemplate}" /> <TextBox Grid.Row="1" Grid.Column="1" FontSize="14" Text="{Binding Field2, Mode=TwoWay}" Margin="0,4,3,2" /> </Grid> </telerik:RadDropDownButton.DropDownContent> </telerik:RadDropDownButton> </Grid> </UserControl>