In this work we study the behavior of a full-duplex (FD) and amplify-and-forward (AF) relay with multiple antennas, where hardware impairments of the FD relay transceiver is taken into account. Due to the inter-dependency of the transmit relay power on each antenna and the residual self-interference in an FD-AF relay, we observe a distortion loop that degrades the system performance when the relay dynamic range is not high. In this regard, we analyze the relay function in presence of the hardware inaccuracies and an optimization problem is formulated to maximize the signal to distortion-plus-noise ratio (SDNR), under relay and source transmit power constraints. Due to the problem complexity, we propose a gradient-projection-based (GP) algorithm to obtain an optimal solution. Moreover, a nonalternating sub-optimal solution is proposed by assuming a rank-1 relay amplification matrix, and separating the design of the relay process into multiple stages (MuStR1). The proposed MuStR1 method is then enhanced by introducing an alternating update over the optimization variables, denoted as AltMuStR1 algorithm. It is observed that compared to GP, (Alt)MuStR1 algorithms significantly reduce the required computational complexity at the expense of a slight performance degradation. Finally, the proposed methods are evaluated under various system conditions, and compared with the methods available in the current literature. In particular, it is observed that as the hardware impairments increase, or for a system with a high transmit power, the impact of applying a distortion-aware design is significant.