I finally figured this one out got it working.
Apparently, RadAjaxManager wants to update the ComboBox as well for everything to work together.
<telerik:RadAjaxManager ID="RadAjaxManager" runat="server" UpdatePanelsRenderMode="Inline">
<AjaxSettings>
<telerik:AjaxSetting AjaxControlID="RadAjaxManager">
<UpdatedControls>
<telerik:AjaxUpdatedControl ControlID="RadComboBox" />
<telerik:AjaxUpdatedControl ControlID="RadGrid" />
</UpdatedControls>
</telerik:AjaxSetting>
...
</AjaxSettings>
</telerik:RadAjaxManager>
If anyone can provide me a credible reason as to why this is, I will gladly mark it as the answer. Otherwise, I hope this prevents frustration for someone else.