Furhter notes: I have a similary structured (big) project and it works like described above plus one problem: whenever I define a link from panel to (same) panel I get an object not set exception ( see my previous post).
<div>
<asp:ScriptManager id="ScriptManager1" runat="server"></asp:ScriptManager>
<asp:LinkButton ID="LinkButton1" runat="server">Ajax to bottom panel</asp:LinkButton>
<asp:Button ID="Button2" runat="server" Text="No Ajax, just postback" />
<asp:Panel
ID="Panel1" runat="server" Height="50px" Width="398px" BackColor="#E0E0E0">
Bottom panel<br />
<asp:Button ID="Button1" runat="server" Text="Postback" OnClick="Button1_Click" />
<asp:TextBox ID="ASPxLabel1"
runat="server" Text="ASPxLabel">
</asp:TextBox>
</asp:Panel>
<asp:TextBox ID="ASPxLabel2"
runat="server" Text="ASPxLabel">
</asp:TextBox>
</div>
<telerik:RadAjaxManager ID="RadAjaxManager1" runat="server" DefaultLoadingPanelID="RadAjaxLoadingPanel1">
<AjaxSettings>
<telerik:AjaxSetting AjaxControlID="LinkButton1">
<UpdatedControls>
<telerik:AjaxUpdatedControl ControlID="Panel1" />
</UpdatedControls>
</telerik:AjaxSetting>
</AjaxSettings>
</telerik:RadAjaxManager>
<telerik:RadAjaxLoadingPanel id="RadAjaxLoadingPanel1" runat="server" Width="75px" Height="75px">
<asp:Image ID="Image1" runat="server" AlternateText="Loading..." ImageUrl="~/RadControls/Skins/Default/Ajax/loading1.gif" />
</telerik:RadAjaxLoadingPanel>