I am unable to make the chat window in the game smaller, and having it open with the size of over half of the game's window bugs me. I can keep it closed for the most part, but when I want to see what I just got from a drop (or see what my friend just told me), it makes playing the game rather hard.
By the way, I found a way to make the text in the chat window bigger, but not how to make the overall window smaller.
You can adjust the size of your window by dragging from the icon in the bottom right hand corner of your chat window. If this isn't working for you, you may have a misbehaving file on your computer. If you contact Customer Support they can help assist you with replacing this file.