This is a bug when using manual Load On Demand and the filtering mechanism, which is a very rare case.
As we are going to address it in the future, as a workaround, please modify the ItemsLoaded function in the way shown below:
(combo.get_items().get_count() > 0)
// pre-select the first item
combo._filterText = combo.get_text();
// OR = "";
This will filter the Items after they load with the text in the input, which is that of the first Item, and only it will show in the drop down. If you want to show *all* Items in this case, set the _filterText property to empty string.
Finally the drop down resizing glitch you see in the first case is a bug, which we also know and will fix in the future. You can work it around by setting a specific height to that RadComboBox.
I hope this helps.
the Telerik team