The issue lies in the fact that ASP.NET considers every AJAX request comming from one aspx page to another aspx page to be a first time page load... even if the aspx page sending the request has already been loaded (which should be the case in every instance).  Since ASP.NET considers every AJAX request to be a first time page load and not a post back it will send the HTML contents of the recieving aspx page in the Response.Output stream after your generated xml or json.  The resolution was so simple I felt stupid... simply remove ALL content out of the recieving aspx page, the only thing that should be there is asp page declaration (one asp tag).  Anything else will be sent back in the Respons.Output stream.

I suspect that the grid can't handle the extranious html that follows the xml document.  I can't figure out how to get .Net to not send that in the Response buffer, and I can't figure out how to get the grid to ignore it.