"Are you using a custom navigator or is this the standard navigation pane?"
I don´t know the difference. But I am using a navigator created from "Navigators", under "Shared Elements", in the designer client.
It was created several years ago (I think before one could use "Framesets").
One solution would be to use framesets insted - but it is rather much work to do this since there are very many forms and views in the database.
"I think it was something about the new resolutions & handling introduced in Windows 10 and Surface."
The shrink problem also applies to Windows 7.
I tried to create a new simple database with a simple navigator and I got the same problem with shrinking.