I am seeing the same errant behavior with the sample you supplied.
Perhaps I misunderstand the ValidateOnEvent options. I am assuming when I specify either "All" or "Blur" the following will occur:
- I type an errant value in the box
- I hit the TAB key, or click the focus away from the box
- The value is validated and error displayed
Currently, both in my work and your sample, I can only get the validation to occur when I click on the submit button.
I've tried in IE7&8, FF & Chrome
.NET Framework 3.5.30729.1
Telerik.Web.UI.dll version 2009.2.701.35
IIS 7.0.6000.16386 (on Vista x64 SP2)