By default, CA SDM is going to show up to 25 templates as a drop down list.
When exceeding this value, it is going to open a lookup window.
This can be adjusted by following the steps described in this document: TEC479559
Or you can adjust the form, by adding the "lookup=no" instruction, as per document: TEC470895
However, when you have multi_tenancy = ON, CA SDM is always going to open a lookup window. This is by design.
In order to make it work as a drop down list it is necessary to customize the form. For further assistance on customizations, please refer to the CA Service Desk Manager Community: CA Service Desk Manager Discussions