I figured this one out. Thought I'd post an answer for anyone interested. The rendering is different between the two versions of AjaxControlToolkit. In order to reposition the ValidatorCallout window I found the following to work best.
You have to override all of the .ajax__validatorcallout_* css classes that the toolkit generates with your own custom styles. It's odd, but it seems that you have to override each style in order to get it to work properly. I used firefox web dev toolbar to discover the styles that were being generated and then I overrode them as follows.
<style>
.CustomValidator {position:relative;margin-left:-80px;}
.CustomValidator div {border:solid 1px Black;background-color:LemonChiffon; position:relative;}
.CustomValidator td {border:solid 1px Black;background-color:LemonChiffon;}
.CustomValidator .ajax__validatorcallout_popup_table {display:none;border:none;background-color:transparent;padding:0px;}
.CustomValidator .ajax__validatorcallout_popup_table_row {vertical-align:top;height:100%;background-color:transparent;padding:0px;}
.CustomValidator .ajax__validatorcallout_callout_cell {width:20px;height:100%;text-align:right;vertical-align:top;border:none;background-color:transparent;padding:0px;}
.CustomValidator .ajax__validatorcallout_callout_table {height:100%;border:none;background-color:transparent;padding:0px;}
.CustomValidator .ajax__validatorcallout_callout_table_row {background-color:transparent;padding:0px;}
.CustomValidator .ajax__validatorcallout_callout_arrow_cell {padding:8px 0px 0px 0px;text-align:right;vertical-align:top;font-size:1px;border:none;background-color:transparent;}
.CustomValidator .ajax__validatorcallout_callout_arrow_cell .ajax__validatorcallout_innerdiv {font-size:1px;position:relative;left:1px;border-bottom:none;border-right:none;border-left:none;width:15px;background-color:transparent;padding:0px;}
.CustomValidator .ajax__validatorcallout_callout_arrow_cell .ajax__validatorcallout_innerdiv div {height:1px;overflow:hidden;border-top:none;border-bottom:none;border-right:none;padding:0px;margin-left:auto;}
.CustomValidator .ajax__validatorcallout_error_message_cell {font-family:Verdana;font-size:10px;padding:5px;border-right:none;border-left:none;width:100%;}
.CustomValidator .ajax__validatorcallout_icon_cell {width:20px;padding:5px;border-right:none;}
.CustomValidator .ajax__validatorcallout_close_button_cell {vertical-align:top;padding:0px;text-align:right;border-left:none;}
.CustomValidator .ajax__validatorcallout_close_button_cell .ajax__validatorcallout_innerdiv {border:none;text-align:center;width:10px;padding:2px;cursor:pointer;}
</style>
Note: I added the first .CustomValidator {position:relative;margin-left:-80px;} line to the classes that were generated. I also broke out the .CustomValidator div, .CustomValidator td so that I could add the position:relative; to the div and not the td. The margin-left:-80px is what I needed to shift everything left.
Then just stick the CustomValidator CssClass into your ValidatorCalloutExtender:
<cc1:ValidatorCalloutExtender ID="ValidatorCalloutExtender1" runat="server" TargetControlID="MyValidatorControl" CssClass="CustomValidator">