Instead of an exception the file should be served uncombined. To avoid this, you can simply remove the StyleSheetReference entries from the StyleSheetManager if you do not intend to have them combined. Having them there will not bing a performance benefit if they are not combined. The other option is to add the appropriate folders in the web.config: <appSettings> <add key="Telerik.Web.UI.StyleSheetFolders" value="~/folder1; ~/folder2" />
This behavior is expected. The usage of combined or uncombined scripts with RadStyleSheetManager is described in the following article (http://docs.telerik.com/devtools/aspnet-ajax/controls/stylesheetmanager/serving-external-style-sheets).