diff --git a/cms/static/js/base.js b/cms/static/js/base.js
index 5f970a89d5..8b6bca95f3 100644
--- a/cms/static/js/base.js
+++ b/cms/static/js/base.js
@@ -73,6 +73,18 @@ function(
 
         // nav - dropdown related
         $body.click(function() {
+            // Reset iframe height to default when the XBlock action dropdown is closed
+            if ($('.nav-dd .nav-item .wrapper-nav-sub.is-shown').length && window.self !== window.top) {
+              try {
+                window.parent.postMessage({
+                  type: 'toggleCourseXBlockDropdown',
+                  message: 'Adjust the height of the dropdown menu',
+                  payload: { courseXBlockDropdownHeight: 0 }
+                }, document.referrer);
+              } catch (e) {
+                console.error('Failed to post message:', e);
+              }
+            }
             $('.nav-dd .nav-item .wrapper-nav-sub').removeClass('is-shown');
             $('.nav-dd .nav-item .title').removeClass('is-selected');
             $('.custom-dropdown .dropdown-options').hide();
diff --git a/cms/static/js/views/pages/container.js b/cms/static/js/views/pages/container.js
index b483b98f11..39b6ba30a3 100644
--- a/cms/static/js/views/pages/container.js
+++ b/cms/static/js/views/pages/container.js
@@ -678,33 +678,35 @@ function($, _, Backbone, gettext, BasePage,
             // Calculate the viewport height and the dropdown menu height.
             // Check if the dropdown would overflow beyond the iframe height based on the user's click position.
             // If the dropdown overflows, adjust its position to display above the click point.
-            const courseUnitXBlockIframeHeight = window.innerHeight;
-            const courseXBlockDropdownHeight = subMenu.offsetHeight;
-            const clickYPosition = event.clientY;
+            const iframeHeight = window.innerHeight;
+            const dropdownHeight = subMenu.offsetHeight;
+            const offsetBuffer = 10;
 
-            if (courseUnitXBlockIframeHeight < courseXBlockDropdownHeight) {
-                // If the dropdown menu is taller than the iframe, adjust the height of the dropdown menu.
+            const targetRect = event.target.getBoundingClientRect();
+            const targetBottom = targetRect.bottom;
+            const targetTop = targetRect.top;
+
+            // Calculate total space needed below the target to fit dropdown
+            const dropdownBottom = targetBottom + dropdownHeight + offsetBuffer;
+
+            const dropdownFitsBelow = dropdownBottom <= iframeHeight;
+            const dropdownFitsAbove = dropdownHeight + offsetBuffer < targetTop;
+
+            if (!dropdownFitsBelow) {
+              if (dropdownFitsAbove && this.options.isIframeEmbed) {
+                // Display the dropdown above the button
+                subMenu.style.top = `-${dropdownHeight}px`;
+              } else {
+                // Request parent to expand iframe height to fit dropdown
+                const requiredExtraHeight = dropdownBottom - iframeHeight;
                 this.postMessageToParent({
-                    type: 'toggleCourseXBlockDropdown',
-                    message: 'Adjust the height of the dropdown menu',
-                    payload: { courseXBlockDropdownHeight },
+                  type: 'toggleCourseXBlockDropdown',
+                  message: 'Expand iframe to fit dropdown',
+                  payload: {
+                    courseXBlockDropdownHeight: requiredExtraHeight,
+                  },
                 });
-            } else if ((courseXBlockDropdownHeight + clickYPosition) > courseUnitXBlockIframeHeight) {
-                if (courseXBlockDropdownHeight > courseUnitXBlockIframeHeight / 2) {
-                    // If the dropdown menu is taller than half the iframe, send a message to adjust its height.
-                    this.postMessageToParent({
-                      type: 'toggleCourseXBlockDropdown',
-                      message: 'Adjust the height of the dropdown menu',
-                      payload: {
-                        courseXBlockDropdownHeight: courseXBlockDropdownHeight / 2,
-                      },
-                    });
-                } else {
-                    // Move the dropdown menu upward to prevent it from overflowing out of the viewport.
-                    if (this.options.isIframeEmbed) {
-                        subMenu.style.top = `-${courseXBlockDropdownHeight}px`;
-                    }
-                }
+              }
             }
 
             // if propagation is not stopped, the event will bubble up to the
diff --git a/common/templates/xblock_v2/xblock_iframe.html b/common/templates/xblock_v2/xblock_iframe.html
index 39eb044b18..ba4828df02 100644
--- a/common/templates/xblock_v2/xblock_iframe.html
+++ b/common/templates/xblock_v2/xblock_iframe.html
@@ -455,9 +455,6 @@
             // it will report the height of its contents to the parent window when the
             // document loads, window resizes, or DOM mutates.
             if (window !== window.parent) {
-                var lastHeight = window.parent[0].offsetHeight;
-                var lastWidth = window.parent[0].offsetWidth;
-
                 function dispatchResizeMessage(event) {
                     // Note: event is actually an Array of MutationRecord objects when fired from the MutationObserver
                     var newHeight = rootNode.scrollHeight;
@@ -472,10 +469,6 @@
                             }
                         }, document.referrer
                     );
-
-                    lastHeight = newHeight;
-                    lastWidth = newWidth;
-
                     // Within the authoring microfrontend the iframe resizes to match the
                     // height of this document and it should never scroll. It does scroll
                     // ocassionally when javascript is used to focus elements on the page
diff --git a/xmodule/modulestore/tests/test_api.py b/xmodule/modulestore/tests/test_api.py
index 4e665c9eec..03dd79d4ff 100644
--- a/xmodule/modulestore/tests/test_api.py
+++ b/xmodule/modulestore/tests/test_api.py
@@ -57,7 +57,7 @@ def test_file_paths_api():
     Test the `get_python_locale_root` returned path.
     """
     root = get_python_locale_root()
-    assert root.endswith('edx-platform/conf/plugins-locale/xblock.v1'), 'Needs to match Makefile and other code'
+    assert root.endswith('/conf/plugins-locale/xblock.v1'), 'Needs to match Makefile and other code'
 
 
 def test_get_javascript_i18n_file_name():