I've been having the same problem with the AlwaysVisibleControl and IE 7. The doctype solutions above did not help me.
What finally worked was making the TargetControlId point to an asp:Panel. Originally I had it pointing to an asp:Table, which worked fine in IE 6, but not in IE 7.
I'm just programing hack, so I have no idea why the TargetControlId wants a Panel in IE 7. Also, I've never read the documentaton. It may say "point to a Panel" for all I know. Again, I'm hack.
But I'm a hack that found my solution. Hope it works for anyone else that is still having this problema