Unfortunately this seems to be a major bug in the new version of AjaxConttrollToolkit, they fixed numerous bugs but it seems they introduced this really bad one. I have reported the problem here, but I have no immediate fix.
If they reply with any workaround I will post it here.
For now, anyone using medium trust web hosting should not upgrade to this version of mojoPortal, if you are setting up a new site you will have to use the previous version.
At this point it would be a major hassle to go back to an older and very buggy version of ajaxcontroltoolkit, all we can do is hope that they fix it soon (or provide a workaround) and we could make a new release again with the new version.