Problems using UpdateProgress

As per issue (1) most likely it is ajax timing out. Default timeout is 90 seconds. To increase that use ScriptManager's AsyncPostBackTimeout property:

<asp:ScriptManager ID="ScriptManager1" runat="server" AsyncPostBackTimeout="400">
</asp:ScriptManager>

If ajax call is timing out, controls on the page might not work correctly so increasing timeout might solve problem (2) as well.

I have had very same problems with ASP.NET UpdateProgress. I fixed it by handling script manager events directly:

<script language="javascript" type="text/javascript">

//adding event handlers for ajax initialize request and end request
Sys.WebForms.PageRequestManager.getInstance().add_initializeRequest(ShowHandler);
Sys.WebForms.PageRequestManager.getInstance().add_endRequest(HideHandler);

function ShowHandler(sender, args) {
    //show div with animation
    pcProcessing_ClientInstance.Show();
}
function HideHandler(sender, args) {
    //hide div with animation
    pcProcessing_ClientInstance.Hide();
}

</script>

Maybe you want this: http://www.codeproject.com/kb/Ajax/ModalUpdateProgress.aspx

It works well for me, even with lengthy operations.