Note that it is not possible to update just a single edit form in the RadGrid. In all case the whole RadGrid is added as updated control and the whole control should be updated. Therefore the RadAjaxLoadingPanel will appear over the whole RadGrid control.
the Telerik team
If you want to get updates on new releases, tips and tricks and sneak peeks at our product labs directly from the developers working on the RadControls for ASP.NET AJAX, subscribe to their blog feed