To reproduce:
- Add 500 items.
Then set the following::
radDropDownList1.DropDownListElement.AutoCompleteSuggest.DropDownList.DefaultItemsCountInDropDown = 500;

Workaround:
radDropDownList1.DropDownListElement.AutoCompleteSuggest = new MySuggestHelper(this.radDropDownList1.DropDownListElement);

class MySuggestHelper : AutoCompleteSuggestHelper
{
    public MySuggestHelper(RadDropDownListElement owner ) : base (owner)
    {
    }
    public override void ShowDropDownList()
    {
        base.ShowDropDownList();
        this.DropDownList.Popup.UpdateLocation();
    }
}