The RadWindow used to hold the toolbar does not have a proper width set and the toolbar's layout is unusable.
Possible workarounds:
- avoid setting the Width property of the editor in percent
- set the ToolsWidth property to the desired static value
- use the following script to calculate the current dimensions each time the toolbar shows up:
function OnClientLoad(sender, args) {
	var toolPopup = sender.get_toolAdapter().get_window();
	toolPopup.__editor = sender;
	toolPopup.add_show(resizeToolWindow);
}

function resizeToolWindow(sender, args) {
	if (sender.__editor) {
		var editorDims = $telerik.getBounds(sender.__editor.get_element());
		sender.set_width(editorDims.width);
		var currDims = sender.getWindowBounds();
		sender.moveTo(editorDims.x, editorDims.y - currDims.height - 10);
	}
}

where the OnClientLoad function is attached to the OnClientLoad event of the editor


Leave your comment on the desired behavior - whether the toolbar should have a static width (i.e., the initial width with which the editor renders, as is the current behavior with the ShowOnFocus ToolbarMode), or whether it should update its width according to the editor width when it shows up (as the script above does).