I can move the 'btnUpload' (button) outside the Update panel and it works. Found an article about Triggers, so tried it and not working either. I would like to keep all these controls inside the UpdatePanel if possible.
<asp:UpdatePanel ID="UpdatePanel1" runat="server" UpdateMode="Conditional" ChildrenAsTriggers="true">
<ContentTemplate>
<asp:FileUpload ID="FileUpload1" runat="server" />
<asp:Button ID="btnUpload" runat="server" Height="25px" onclick="Button1_Click"
Text=" Upload File" Width="85px" />
<asp:Button ID="btnImport" runat="server" Text="Import Users" />
</ContentTemplate>
<Triggers>
<asp:AsyncPostBackTrigger ControlID="btnUpload" />
</Triggers>
</asp:UpdatePanel>
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