Depends how you created the control, what version of Visual Studio, and how nested it is.
For example I currently just went backwards a bit in technology.
I'm using 17 gridviews on a page that are all sql server 2000 driven from code behind and i have a dropdown in the grid for even row as well.
vs 2005 2.0 is what i am using.
I'm using a Master Page (which typically will not be a problem from gridviews, but will need ResolveUrl for jquery references)
Getting to your question, I seem to have that problem with .net asking for a handler when i would tend to copy and paste from .aspx html source. I have MultiView/View/FormView etc... so I tried CTYPE etc..., but upon re-doing the edit with being on the aspx page design view, then use properties and the events. Or if it is a link or button on the page then click on it in design view and it should take you there and NOT have a problem with the Handles.
Some of my code for Edit Button
etc.....
THEN in your properties -> Events, look for "RowEditing" and write in a name then put breakpoints in where it is called and you are there really for edit mode...
I only use 2 other events "RowCancelingEdit" and then "RowUpdating"
Thus I click Edit (which everything is readonly), and a postback occurs (eventually i was to be doing grids again with ajax and not have postbacks) then my fields are in edit mode and dropdown shows list from database as well .... I can update or cancel.... either way it ends in back to readonly state with Edit button visible.
Please post some code if you are still having issues with it.