I using Ajax ModalPopupExtender but problem with this is menu in appication is display over the ModalPopupExtender. I also set z-index=1 for ModalPopupExtender and z-index=100 for but problem not solved.
Use Firebug(Firefox Extension) or something similar to inspect the Z-Index of your menu. Then set the ModalPopupExtender's Z-Index 1 higher.
Without seeing a live page, I can't guess the z-index, but it must be greater than 100. You can try setting it to 10001 or something wildly high.
Set the z-index to something reallly large like @Jab mentioned.
I also found that if you place the ModalPopupExtender at the bottom of your HTML Markup, it sometimes fixes it for some very strange reason. Give it a try.
I am actually having the same problem as Nakul. Setting the z-index on the menu higher then the z-index of the Modal Popup Extender is not working.
I have done Asp.Net development for around 4 years, my experience tells me to stay away from Microsoft's AJAX libraries especially AJAX Control Toolkit. There are bugs in there that they don't seem intent on fixing.
My advice to you: Use another library. I am using JQuery now, the plugins you find for JQuery on the net are of widely varying quality but some of them are really good and others I have bugfixed myself (I only choose the ones where I can quickly understand the code).
JQuery UI has a very high quality, it includes a dialog widget I am using instead of the ModalPopupExtender. If you dont like the window style, check out one of the 15 plugins presented on this page: 15+ jQuery Popup Modal Dialog Plugins and Tutorials.