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There is an option to only show 1 line per contact, instead of 2.
Yes, I've done that. It's still too big. I often have to scroll the list of just 20 people to select someone. That's annoying.
Single-click opens the menu options
That should be a context click. A single click should restore the window. Many IMs work that way.
When we first started using it I had to turn that on per contact.
Yes, I've done that manually for each contact. I hope it sticks. And yes, it is a group policy that I don't have privs to change. There's a Powershell cmdlet that will let you alter that, but it fails for me.
This does not happen to me when I set to Away, but does when I am set to Be Right Back.