According to Microsoft the FileUpload control is not compatible with an AJAX UpdatePanel.
I am aware that a PostBackTrigger can be added to the submit button of the
Try the AJAX AsyncFileUpload. It works well if used in the matter it is intended to be used (handle the UploadedComplete event).
http://www.asp.net/AJAX/AjaxControlToolkit/Samples/AsyncFileUpload/AsyncFileUpload.aspx