The dialog will adapt to the width of the image, but the height must fit. The maximum height in pixels depends on the font size of the Windows system, and the ldConnectAs and ldDatabase option (which affect the dialog's height).
What do you think about this idea: not only width is adjusted but also height: minimal height is the one necessary for the fields. max height is defined by the picture and the groupbox is aligned to the top of the picture. Would this be a possible enhancement?