I have the same exact problem. Sometime the dropdown take almost all the screen! Any new about this?
No fix yet. If you're seeing this problem when selecting an item from the "New" menu at the upper-left, instead use your right-click "New" menu.
Alternatively, if you don't mind losing tabs, you can switch to the Windows 10 Explorer. See: https://lesferch.github.io/SwitchExplorer