After I installed Beta 2 of the AJAX framework, I started getting the 'Sys' is undefined error message. After hours of debugging, it turned out that this was because I had anonymous users denied i.e.:
<authorization>
<deny users="?"></deny>
</authorization>
So somehow the scripts weren't getting loaded. It turns out this was a simple fix, all I had to do is add the following code to the config file to allow access the script handler by anonymous users:
<location path="ScriptResource.axd">
<system.web>
<authorization>
<allow users="*"/>
</authorization>
</system.web>
</location>