If you enabled Dialog and Spell Check Handler, VS 2008 automatically added following codes to "<system.web><httpHandlers>" section of Web.config:
<add path="Telerik.Web.UI.DialogHandler.aspx" verb="*" type="Telerik.Web.UI.DialogHandler, Telerik.Web.UI, Version=2008.3.1016.35, Culture=neutral, PublicKeyToken=121fae78165ba3d4"
validate="false" />
<add path="Telerik.Web.UI.SpellCheckHandler.axd" verb="*" type="Telerik.Web.UI.SpellCheckHandler, Telerik.Web.UI, Version=2008.3.1016.35, Culture=neutral, PublicKeyToken=121fae78165ba3d4"
validate="false" />
However, the above codes are only valid for IIS 6 not IIS 7. If you want to enable both features, you need to add following codes to "<system.webServer><handlers>" section instead:
<add name="Telerik.Web.UI.DialogHandler" path="Telerik.Web.UI.DialogHandler.aspx" verb="*" type="Telerik.Web.UI.DialogHandler, Telerik.Web.UI" />
<add name="Telerik.Web.UI.SpellCheckHandler" path="Telerik.Web.UI.SpellCheckHandler.axd" verb="*" type="Telerik.Web.UI.SpellCheckHandler, Telerik.Web.UI" />
And, you must use 2008 Q3 version of RadControl.
Good luck!