We examined teh described setup further and the current behavior is the one we think is correct. What causes the problem with resizing the RadWindow in this case is that in order to fit in the restriction zone, you should first move it to coordinates which will allow it to resize, e.g as shown below:
In this case if 600 is smaller than teh size of the restriction zone, the window will resize as you expect.
For the time being we believe that since you set the height manually it is not expected that the RadWindow should automatically reposition but you should reposition it yourself. If we get more customer requests for changing this behavior we can consider changing it.
the Telerik team