Hi,
Actually you can upgrade to the newer version without rebuilding the source code. Just put the new dlls in the bin folder (don't change any names of dlls).
Then in Web.config you can use assembly mapping to make it use the new version in the <runtime> <assemblyBinding section add this:
<dependentAssembly>
<assemblyIdentity name="AjaxControlToolkit"
publicKeyToken="28f01b0e84b6d53e" />
<bindingRedirect oldVersion="4.1.60623.0"
newVersion="4.1.7.0123" />
</dependentAssembly>
Hope that helps,
Joe