There are 2 conditions here that i've discovered:
1 - The button is located in the UpdatePanel control
In this condition, the UpdateProgress is triggered and is displayed irrespective of whether the AssociatedUpdatePanelID is set on the UpdateProgress.
2 - The button is located OUTSIDE the UpdatePanel control
In this condition, if the AssociatedUpdatePanelID is set on the
UpdateProgress control, then the control is NOT displayed during async postback. However if you don't set the AssociatedUpdatePanelID, then the UpdateProgress IS displayed (presumably because it is associated at a page level).
This reeks like a bug to me. Irrespective of whether the button is located inside or outside of the UpdatePanel, I've got the trigger on the panel set to fire an async postback when the button is clicked. Therefore when the button is clicked, the updatepanel will refresh and that should notify the progress (especially if AssociatedUpdatePanelID is set).
I can provide a repro of this, or explain further if necessary.
Thanks,
-X