No, you don't need to unajaxify the ajaxified controls. Actually everything should work as expected with the difference that you could get the progress appearing even if you don't upload a file, but have a large form data instead.
Can you please, send us the error you get? The exact page content can be retrieved by a browser network trafic monitoring tool like Fiddler (for IE) or Firebug's Net tab (for Firefox). Please, send us the server response to the Telerik.RadUploadProgressHandler.ashx
I hope we will be able to help solving the problem quickly.
the Telerik team
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