Should we be able to just reference the Telerik DLLs within our project, set the Output Local to TRUE and be done with it? Things work perfectly on our development machines where we installed the entire Telerik Control Suite but when we deploy, we have a problem in which Telerik controls within UpdatePanels don't seem to be firing events.
If the controls are rendering on the deployed environment without an error, then the necessary .dll's are at least being referenced somewhere.
However, if you have them installed in the GAC, and your reference is to the GAC, then "copy local" might not be doing anything... they might just be copied, and no one is even referencing them.
Can you double check that all your references are local references, and there aren't different versions installed on the GAC on the two machines?
I would look a the .dlls being outputted and those that are on your machine. I bet there is a .dll that it is looking for in the GAC that is not on your production box.
On a side note, why not just use the ASP.NET Ajax Update Panel?
First a little disclaimer - I work for Telerik :)
This is really a strange case. Could you check for any JavaScript errors on your production environment? I suspect there is some deployment issue (for example web resources not configured properly). In case there are JavaScript errors you can check my blog post which explains how to deal with the most common cases.
In any case I recommend you open a support ticket (if not already).
My problem had to do with an HTTP Module we had running for URL encryption. I have found, however, it is best to NOT combine asp:UpdatePanel and RadAjaxPanel in the same pages.