The test step for clicking on radmenuitem is successfully and correctly recorded with IsInPopup set to False, because the item is not in popup. For every subitem the IsInPopup is correctly set to True, because they are in popup.
During the execution the click is successfully performed, but the test step fails with the following exception:
 '7/19/2013 11:44:52 AM' - 'Fail' : 1. radmenuitem: 'Test' click action.
------------------------------------------------------------
Failure Information: 
~~~~~~~~~~~~~~~
Wait for condition has timed out
InnerException:
System.TimeoutException: Wait for condition has timed out
   at ArtOfTest.Common.WaitSync.CheckResult(WaitSync wait, String extraExceptionInfo, Object target)
   at ArtOfTest.Common.WaitSync.For[T](Predicate`1 predicate, T target, Boolean invertCondition, Int32 timeout, WaitResultType errorResultType)
   at ArtOfTest.Common.WaitSync.For[T](Predicate`1 predicate, T target, Boolean invertCondition, Int32 timeout)
   at ArtOfTest.WebAii.Silverlight.VisualWait.ForVisible(Int32 timeout)
   at ArtOfTest.WebAii.Silverlight.VisualWait.ForNoMotion(Int32 initialWait, Int32 motionCheckInterval, Int32 timeout)
   at Telerik.WebAii.Controls.Xaml.Wpf.RadMenuItem.WaitForSubItemsPopupAnimation()
   at Telerik.WebAii.Controls.Xaml.Wpf.RadMenuItem.Click()
   at Telerik.WebAii.Design.Translators.Xaml.Menu.ItemClickAction.Execute(IApplication appHost)
   at ArtOfTest.WebAii.Design.Extensibility.XamlActionDescriptor.Execute(IAutomationHost autoHost)
   at ArtOfTest.WebAii.Design.Execution.ExecutionEngine.ExecuteStep(Int32 order)

To workaround this issue, you can set IsInPopup to True for the failing test step.

To reproduce:
Sample test and sample application are attached to the internal bug description.