We believe that the reason for the error is something related to the Ajax settings on your server. Do you use any Ajax functionality with success? Are you able to create an Ajax postback? This explains why there are no errors when you move the site to the production server.
You might try to install the latest service packs of the .net framework, they come with fixed in the Ajax framework as well. You can also try to switch your server, if you debug under Cassini (the build in Web Development server in Visual Studio), you might want to try the same under IIS.
the Telerik team