Yes, we need to do this in the DataGrid item's ItemDataBound event. I just got this working. Please check the following link:

http://cutesoft.net/Example/DataGrid_vb.aspx

I will write a note show how to use CuteEditor in the template control of a datagrid.

asp.net Chat http://cutesoft.net/ASP.NET+Chat/default.aspx
Web Messenger: http://cutesoft.net/Web-Messenger/default.aspx
asp.net wysiwyg editor: http://cutesoft.net/ASP.NET+WYSIWYG+Editor/default.aspx
asp wysiwyg html editor: http://cutesoft.net/ASP
asp.net Image Gallery: http://cutesoft.net/ASP.NET+Image+Gallery/default.aspx
Live Support: http://cutesoft.net/live-support/default.aspx