The response from Microsoft for the below issue made me laugh at Microsoft
 
Issue is When you start the Remote Desktop Connection client, you may find that the window size is the same as the remote desktop size, not full screen as expected; however, the Maximize button indicates the window is in the maximized state. If you click the Maximize button, the window does not enter full-screen mode as expected; instead, the window is restored to a size slightly smaller than the remote desktop size.
 
Solution provided by Microsoft: "To work around this issue, restart the computer. The Default.rdp file is replaced by Windows File Protection as soon as you restart the Remote Desktop client."
 
http://support.microsoft.com/kb/302803
 
This is so funny as Microsoft asks to restart the server for small window size of remote desktop connection.
 
The solution that works is
 
1.    Go to run > mstsc

2.    Under Display Tab, move the “Display configuration” settings to Full Screen mode.

3.    Now try connecting to the server. Your issue is resolved. No need to restart the computer.