diff --git a/electron/hudOverlayBounds.test.ts b/electron/hudOverlayBounds.test.ts
index cc00daac..dac1058c 100644
--- a/electron/hudOverlayBounds.test.ts
+++ b/electron/hudOverlayBounds.test.ts
@@ -1,6 +1,9 @@
 import { describe, expect, it } from "vitest";
 
-import { getHudOverlayWindowBounds } from "./hudOverlayBounds";
+import {
+	getHudOverlayWindowBounds,
+	resizeHudOverlayFallbackBounds,
+} from "./hudOverlayBounds";
 
 describe("getHudOverlayWindowBounds", () => {
 	const workArea = {
@@ -71,3 +74,72 @@ describe("getHudOverlayWindowBounds", () => {
 		});
 	});
 });
+
+describe("resizeHudOverlayFallbackBounds", () => {
+	const workArea = {
+		x: 0,
+		y: 0,
+		width: 1920,
+		height: 1080,
+	};
+
+	it("preserves the dragged bottom edge when expanding", () => {
+		expect(
+			resizeHudOverlayFallbackBounds(
+				workArea,
+				{
+					x: 420,
+					y: 700,
+					width: 860,
+					height: 160,
+				},
+				true,
+			),
+		).toEqual({
+			x: 420,
+			y: 320,
+			width: 860,
+			height: 540,
+		});
+	});
+
+	it("preserves the dragged bottom edge when compacting", () => {
+		expect(
+			resizeHudOverlayFallbackBounds(
+				workArea,
+				{
+					x: 420,
+					y: 320,
+					width: 860,
+					height: 540,
+				},
+				false,
+			),
+		).toEqual({
+			x: 420,
+			y: 700,
+			width: 860,
+			height: 160,
+		});
+	});
+
+	it("keeps resized fallback bounds inside the display work area", () => {
+		expect(
+			resizeHudOverlayFallbackBounds(
+				workArea,
+				{
+					x: 1500,
+					y: 900,
+					width: 860,
+					height: 160,
+				},
+				true,
+			),
+		).toEqual({
+			x: 1060,
+			y: 520,
+			width: 860,
+			height: 540,
+		});
+	});
+});
diff --git a/electron/hudOverlayBounds.ts b/electron/hudOverlayBounds.ts
index 9168281f..b8800e30 100644
--- a/electron/hudOverlayBounds.ts
+++ b/electron/hudOverlayBounds.ts
@@ -9,6 +9,10 @@ const NON_PASSTHROUGH_HUD_WIDTH_DIP = 860;
 const NON_PASSTHROUGH_HUD_COMPACT_HEIGHT_DIP = 160;
 const NON_PASSTHROUGH_HUD_EXPANDED_HEIGHT_DIP = 540;
 
+function clamp(value: number, min: number, max: number): number {
+	return Math.min(Math.max(value, min), max);
+}
+
 export function getHudOverlayWindowBounds(
 	workArea: HudOverlayWorkArea,
 	mousePassthroughSupported: boolean,
@@ -33,3 +37,19 @@ export function getHudOverlayWindowBounds(
 		height,
 	};
 }
+
+export function resizeHudOverlayFallbackBounds(
+	workArea: HudOverlayWorkArea,
+	currentBounds: HudOverlayWorkArea,
+	fallbackExpanded: boolean,
+): HudOverlayWorkArea {
+	const nextBounds = getHudOverlayWindowBounds(workArea, false, fallbackExpanded);
+	const maxX = workArea.x + workArea.width - nextBounds.width;
+	const maxY = workArea.y + workArea.height - nextBounds.height;
+
+	return {
+		...nextBounds,
+		x: clamp(currentBounds.x, workArea.x, maxX),
+		y: clamp(currentBounds.y + currentBounds.height - nextBounds.height, workArea.y, maxY),
+	};
+}
diff --git a/electron/windows.ts b/electron/windows.ts
index a1a30358..dbdb4692 100644
--- a/electron/windows.ts
+++ b/electron/windows.ts
@@ -5,7 +5,10 @@ import path from "node:path";
 import { fileURLToPath } from "node:url";
 import { app, BrowserWindow, ipcMain } from "electron";
 import { USER_DATA_PATH } from "./appPaths";
-import { getHudOverlayWindowBounds } from "./hudOverlayBounds";
+import {
+	getHudOverlayWindowBounds,
+	resizeHudOverlayFallbackBounds,
+} from "./hudOverlayBounds";
 import { getPackagedRendererBaseUrl } from "./rendererServer";
 
 const electronWindowsDir = path.dirname(fileURLToPath(import.meta.url));
@@ -253,7 +256,13 @@ function setHudOverlayFallbackExpanded(expanded: boolean) {
 		return;
 	}
 
-	hudOverlayWindow.setBounds(getHudOverlayBounds(), false);
+	const { workArea } = getHudOverlayDisplay();
+	const nextBounds = resizeHudOverlayFallbackBounds(
+		workArea,
+		hudOverlayWindow.getBounds(),
+		expanded,
+	);
+	hudOverlayWindow.setBounds(nextBounds, false);
 	positionUpdateToastWindow();
 	if (hudOverlayWindow.isVisible()) {
 		hudOverlayWindow.moveTop();
diff --git a/src/components/launch/LaunchWindow.tsx b/src/components/launch/LaunchWindow.tsx
index 2158d7a2..b3c92476 100644
--- a/src/components/launch/LaunchWindow.tsx
+++ b/src/components/launch/LaunchWindow.tsx
@@ -427,8 +427,7 @@ function LaunchWindowContent() {
 
 	const hudMode = finalizing ? "finalizing" : recording ? "recording" : "idle";
 	const useNativeHudBarDrag =
-		(platform === "linux" || hudOverlayMousePassthroughSupported === false) &&
-		!showRecordingWebcamPreview;
+		platform === "linux" || hudOverlayMousePassthroughSupported === false;
 
 	return (
 		<HudInteractionContext.Provider value={{ onMouseEnter: handleHudMouseEnter, onMouseLeave: handleHudMouseLeave }}>