I build up a test demo page based on your code and tested it under IE8 Compat View and also under IE b in IE7 mode but every time the tooltip was correctly rendered - please examien teh atatched demo. The only thing that I can assuem is that you are having some code in the OnClientBeforeShow handler which causes teh problem because the only difference I can see between your code and my page is this event. Please, reproduce the issue on my demo page and once you succeed, paste its full source code here and I will examine the problem on my side. Make also sure that the version you are using is the one you have selected (the latest one) and in case it is not - provide information about the exact version of RadControls.
the Telerik team