Ajax control tool kit 4.0 not registering in visual studio

I tried downloading and installing the latest Ajax toolkit for Visual Studio 2010.

I have tried almost everything I have found but nothing seems to get me past the fact that just after implementation of a scriptmanager, I cannot implement an updatepanel.

I receive the error:

Element 'UpdatePanel' is not a known element. This can occur if there is a compilation error in the Web site, or the web.config file is missing.      

I also tried using the newer ajaxToolKit:ToolkitScriptManager instead of the scriptmanager.
It will compile however, I receive the following runtime error:
Parser Error Message: Type 'AjaxControlToolkit.ToolkitScriptManager' does not have a public property named 'UpdatePanel'.

All pages contain the following reference:
<%@ Register Assembly="AjaxControlToolkit" Namespace="AjaxControlToolkit" TagPrefix="ajaxToolKit" %>

Thanks for the assistance.

This code fails compilation:
<asp:ScriptManager ID="ScriptManager1" runat="server">
      <asp:UpdatePanel ID="test" runat="server">
             <ContentTemplate>
                <input id="Text1" type="text" />
              </ContentTemplate>
      </asp:UpdatePanel>
</asp:ScriptManager>

Runtime failure from this code:

<ajaxToolKit:ToolkitScriptManager ID="ToolkitScriptManager1" runat="server">
   <asp:UpdatePanel ID="test2" runat="server">
        <ContentTemplate>
             <input id="Text2" type="text" />
         </ContentTemplate>
    </asp:UpdatePanel>
</ajaxToolKit:ToolkitScriptManager>

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partialwebconfig.txt