Today, "suddenly" I noticed that Ajax causes full postback in my pages in windows XP running via IIS virtual directory. But no problem if I run it via VS2010's built-in web development server. Something may have changed in the HTML header/footer which caused Ajax to go nuts. But why only via XP's IIS, I don't know, WEIRD.
However, this solution solved the problem
Upon solving this problem, I found that it also solves the AUTOPOSTBACK=TRUE ajax "bug" which causes full postback for RadioButtonList and checkboxlist etc....