Is there a specifc reason why you have the Timer control in the UpdatePanel?
Every time I have needed to use a Timer control to cause an UpdatePanel refresh, I have set it up like the following and it works fine with MasterPages:
<asp:UpdatePanel ID="UpdatePanel1" runat="server" UpdateMode="Conditional">
<Triggers>
<asp:AsyncPostBackTrigger ControlID="Timer1" EventName="Tick" />
</Triggers>
<ContentTemplate>
<!-- your content here, no timer -->
</ContentTemplate>
</asp:UpdatePanel>
<asp:Timer ID="Timer1" runat="server" Interval="5000" OnTick="Timer1_Tick">
</asp:Timer>
Use the Trigger to cause the UpdatePanel to refresh from the Tick event. You only want to embed content in your UpdatePanel if possible.
Kelsey
2010-08-19 15:45:09