"asp:updatepanel" is not a known element using Visual Web Developer 2008 Express  Edition

        <asp:ScriptManager runat="server" ID="ScriptManager1" EnablePartialRendering="true" />

        <asp:UpdatePanel ID="OuterPanel" UpdateMode="Conditional" runat="server">

        </asp:UpdatePanel>

What is the ASP.NET version that is used in your website ? check that through "property pages->build-> see "target framwork"

it seems it's set to .NET 2.0 , if so, please make sure you have ajax extensions installed and that you configured your application to use ajax .

If it's 3.5, please make sure that the ajax controls have been registered under the <pages> section in web.config file.(post the <pages> section if you are not sure).

Well I don't know why happened. I had 3.5sp1 on both dev machine with vwd2008ee and the iis hosting server. I created a new website on my dev machine and copied the web.config file to the server and everything worked. IDK why this wasn't already included in the config but thank you for pointing out the the registration in the config file. 

Now if I could only get the AJAX Extensions and AJAX Control Toolkit to show in my toolbox. (See my other post, Currently under mod review, if you might know how to fix)

Thanks for the help.