Everything was working fine for collapsible panels and calendar extender. However when I went to use the UpdatePanel AJAX control it was causing a full postback and not a partial postback.
After hours of troubleshooting I finally determined the problem was with my web.config file. Because I was converting an existing 2003 project I was using the following tag
Once I removed this tag from within the <system.web> section of the web.config file, everything worked as expected.
So if you are experiencing problems with your AJAX controls, be sure to inspect your web.config file to ensure it is not a problem.
If you would like to know what should be in the web.config file for an AJAX enabled web site, create a new project Web Application AJAX Enabled. Inspect the web.config file and it will contain the information you need.