Originally AJAX (Atlas) was developed as a CTP and released as v1.0.61025. It got its official first release and now comes as 3.5.0.0. Lots of things break when assembly references are wrong, particularly in the web.config file.
This error is but one particularly annoying symptom, as its un-catchable.
An Error has occured
System.Web.HttpParseException: The base class includes the field 'manager', but its type (System.Web.UI.ScriptManager) is not compatible with the type of control (System.Web.UI.ScriptManager).
at System.Web.Compilation.BaseTemplateCodeDomTreeGenerator.BuildFieldDeclaration(ControlBuilder builder)
at System.Web.Compilation.BaseTemplateCodeDomTreeGenerator.BuildSourceDataTreeFromBuilder(ControlBuilder builder, Boolean fInTemplate, Boolean topLevelControlInTemplate, PropertyEntry pse)
at System.Web.Compilation.BaseTemplateCodeDomTreeGenerator.BuildSourceDataTreeFromBuilder(ControlBuilder builder, Boolean fInTemplate, Boolean topLevelControlInTemplate, PropertyEntry pse)
at System.Web.Compilation.TemplateControlCodeDomTreeGenerator.BuildMiscClassMembers()
at System.Web.Compilation.PageCodeDomTreeGenerator.BuildMiscClassMembers()
at System.Web.Compilation.BaseCodeDomTreeGenerator.BuildSourceDataTree()
at System.Web.Compilation.BaseTemplateBuildProvider.GenerateCode(AssemblyBuilder assemblyBuilder)
at System.Web.Compilation.AssemblyBuilder.AddBuildProvider(BuildProvider buildProvider)