OK, so my friend would like to play his game in windowed mode, and while it works well on his end the problem is that his laptop has a smallish screen, i.e. 1366x768, and running the game in windowed would end up with the top and bottom portions being cut off by the taskbar. Setting the resolution to a lower mode seems to work, but the window reverts to its normal size upon restarting.

Maybe you could try to autohide the taskbar? Mine's also in that resolution, but nothing is cut off. :/ And I'm playing in Windowed mode.

He can do it, but it ain't an option in his case, or in my case for that matter as it can be annoying.

What you see is what you get. In this case, what TS3 offers as the smallest size is what you get.

You can, however, shrink the game window even smaller (and Windows' feature, not TS3). The problem is the game will be missing pixels, and text can be hard to read. Have you tried that?