Telerik broken when upgraded website from .net 3.5 framework to 4.0

[Syed]

Hello
Our ASP.NET (not MVC) website was running fine using framework 3.5.

We upgraded the .net framework to 4.0 yesterday and we started getting the following javascript errors:
http://local.demo.ca/Telerik.Web.UI.WebResource.axd?_TSM_HiddenField_=ctl00_RadScriptManager1_TSM&compress=1&_TSM_CombinedScripts_=%3b%3bSystem.Web.Extensions%2c+Version%3d4.0.0.0%2c+Culture%3dneutral%2c+PublicKeyToken%3d31bf3856ad364e35%3aen-US%3a1f68db6e-ab92-4c56-8744-13e09bf43565%3aea597d4b%3ab25378d2%3bTelerik.Web.UI%2c+Version%3d2011.1.413.35%2c+Culture%3dneutral%2c+PublicKeyToken%3d121fae78165ba3d4%3aen-US%3abd09f19b-b595-4ea4-8ab8-449a745bc83c%3a16e4e7cd%3af7645509%3a24ee1bba%3af46195d3%3a19620875%3a874f8ea2%3a490a9d4e%3a58366029%3a39040b5c%3abd8f85e4Failed to load resource: the server responded with a status of 404 (Not Found)

and

Uncaught Error: ASP.NET Ajax client-side framework failed to load.

and

Uncaught ReferenceError: Sys is not defined


How can we fix this?
Do we need to replace the Telerik files in the bin directory to the 4.0 ones?
Do we need to change some settings in the web.config?


When we tried to put the 4.0 dlls in the bin folder we get the following error:

Could not load file or assembly 'Telerik.Web.UI, Version=2011.1.413.35, Culture=neutral, PublicKeyToken=121fae78165ba3d4' or one of its dependencies. The located assembly's manifest definition does not match the assembly reference. (Exception from HRESULT: 0x80131040)

Please advise steps.

Syed

[Syed]

An Update:

I managed to fix the issue.

So, The website is running on ASP.NET 4.0
I changed

<add name="Telerik_Web_UI_WebResource_axd" path="Telerik.Web.UI.WebResource.axd" type="Telerik.Web.UI.WebResource" verb="*" preCondition="integratedMode,runtimeVersionv2.0"/>

to

<add name="Telerik.Web.UI.WebResource.axd_*" path="Telerik.Web.UI.WebResource.axd" verb="*" type="Telerik.Web.UI.WebResource, Telerik.Web.UI" preCondition="integratedMode"/>

and

<add path="Telerik.Web.UI.WebResource.axd" type="Telerik.Web.UI.WebResource" verb="*" validate="false"/>

to

<add path="Telerik.Web.UI.WebResource.axd" verb="*" type="Telerik.Web.UI.WebResource, Telerik.Web.UI" validate="false"/>

Also, i have a URL Rewrting HTTP Module in the setup
Previously, i had added an exception on the Url rewriting to ignore

telerik.web.ui.dialoghandler.aspx

now it needs 

telerik.web.ui.webresource.axd

as well.

Note that I am still using .NET3.5 dlls for Telerik.

So i have it working but would love an insight on why the above makes it work.