*sigh* here we go again...
RDP for Mac version 10.7.4 has broken multiple monitor support - TechCommunity link from Jan 2022
https://aka.ms/rdmacbeta to download beta builds (short link for https://install.appcenter.ms/orgs/rdmacios-k2vy/apps/microsoft-remote-desktop-for-mac/distribution_groups/all-users-of-microsoft-remote-desktop-for-mac )
However, I've tried the latest released build [Version 10.7.7 (2001) from Jun 23], Version 10.7.7 (2000) from Jun 22, Version 10.7.7 (1998) from Jun 17, Version 10.7.7 (1997) from Jun 08, and they're all broken in the same way as before. That is, RDP only appearing on one screen, at 1024x768.
Built-in screen is below the external monitor in terms of layout, and I'm still running a 14" M1 Pro MBP on the latest version of Monterey.
BRB, trying all the versions until hopefully finding one that actually works, because I've got way too much work to do at the moment to have RDP be broken. I need to learn never to update this app!