// Get the top offset for the popup
        var yoffSet;
        if(AjaxControlToolkit.PopupControlPopupPosition.Top == this._position) {
            yoffSet =  (-1 * this.get_element().offsetHeight) + this._offsetY;
        } else if (AjaxControlToolkit.PopupControlPopupPosition.Bottom == this._position) {
            yoffSet =  this.get_element().offsetHeight + this._offsetY;
        } else {
            yoffSet = this._offsetY;
        }
        <inserted>yoffSet = yoffSet + this.findScrollOffset('y');</inserted>
        return yoffSet;
    },
   
     <inserted>findScrollOffset : function(opt)
{
    // from Quirksmode and modified
    var _x,_y;
    if (self.pageYOffset) // all except Explorer
    {
        // _getTopOffset function already works in other browsers
     _x = 0; //self.pageXOffset;
     _y = 0; //self.pageYOffset;
    }
    else if (document.documentElement && document.documentElement.scrollTop)
     // Explorer 6 Strict
    {
     _x = document.documentElement.scrollLeft;
     _y = document.documentElement.scrollTop;
    }
    else if (document.body) // all other Explorers
    {
     _x = document.body.scrollLeft;
     _y = document.body.scrollTop;
    }
        if (opt == 'x') {
      return _x;
     }
     if (opt == 'y') {
      return _y;
     }
},</inserted>

This fixed the problem in IE7 and did not cause a new problem in firefox.  I did not test any other browsers.