  The Electron Cyclotron Drift Instability (ECDI) driven by the electron
$E\times B$ drift in partially magnetized plasmas is investigated with highly
resolved particle-in-cell simulations. The emphasis is on two-dimensional
effects involving the parallel dynamics along the magnetic field in a finite
length plasma with dielectric walls. It is found that the instability develops
as a sequence of growing cyclotron harmonics demonstrating wave breaking and
complex nonlinear interactions, being particularly pronounced in ion density
fluctuations at short wavelengths. At the same time, nonlinear evolution of
fluctuations of the ion and electron density, as well as the anomalous electron
current, shows cascade toward long wavelengths. Tendency to generate long
wavelength components is most clearly observed in the spectra of the electron
density and the anomalous current fluctuations. An intense but slowly growing
mode with a distinct eigen-mode structure along the magnetic field develops at
a later nonlinear stage enhancing the tendency toward long wavelength
condensation. The latter mode having a finite wavelength along the magnetic
field is identified as the Modified Two-Stream Instability (MTSI). It is shown
that the MTSI mode results in strong parallel heating of electrons.
