The size of the main undocked window cannot be modified by resizing it manually. It is sized so that it is exactly large enough to contain its children. So, you can do what you want by moving the component palette to the desired location. When you do so the main window will increase in size so that the component palette fits.
Judging by your screenshot, your toolbars are drawn in a way to indicate that they are locked and cannot be dragged. That's not functionality that is present in the plain vanilla Delphi IDE, so I suspect that you have used functionality from either GExperts or CnPack to lock your toolbars. Obviously you'll need to unlock them in order to move them.
Finally, I should point out that the inability to resize the main window vertically is not new. Classic Delphi versions (e.g. Delphi 7) behaved in exactly the same way. So I think that the fundamental issue is not related to a Delphi version upgrade, but rather is related to you having locked your toolbars.