First, sorry for the delayed reply!
The PanelBar does not currently support the scenario where it will fill up the available space. This comes from the fact that the PanelBar items are arranged in a StackPanel which will not expand by default. We are planning to support this for the future versions, but it is not available today.
Yes, I confirmed that when there is a TreeView in PanelBar it will not fill up the available space. There was a problem with the HorizontalContentAlignment and VerticalContent alignment properties which were not applied properly.
This issue has been fixed now, but unfortunately it is not part of the recently released Service Pack. If you like, I can send you the patched assemblies.
Thanks for your involvement and suggestions, your Telerik Points have been updated.
the Telerik team
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