WSS's "Select People and Groups" dialog box not working as expected

Hi WSS community,
I have being trying to figure out how the picker.aspx page works, and it looks like is getting all users from the ActiveDirectory where the WSS farm is deployed. That's good, but, for some reason, is not working as expected in my environment with approximately 5000 objects in the directory. Let me give you more details:

If I open up pickup.aspx by clicking the Browse icon in the Add users web form, I will get the pickup form that we are talking about, then if I enter more than two letters, say something like "lo" it will sit there and do nothing, just waiting, on the other hand, if I enter only one letter, say something like "l" it will bring immediately a bunch of users where the letter "l" is in any part of their displayName attribute. That's the default behavior that I'm getting.

So far I was able to make it behave as I want, but with limited results, let me explain, I updated the "peoplepicker-onlysearchwithinsitecollection" property to 'yes' with the setproperty operation of the stsadm command line tool, then I went back to the lookup form to type lopez and I got my account, which is good, however, I was not getting all lopez accounts only the members of the site where I was opening the lookup form, in this case only my account. I updated again the same property to 'no' and I went back to the same old behavior.

What I want to do is to make it work as a real lookup form, for example, if I enter lopez then I should get all lopez users, even if they aren't members of any given WSS site.

I have a medium farm, three servers: front end web server, app/search express/job server and the db server, the first two running WSS SP1 and the db server running SQL Server 2005.

I'll appreciate any help that can be provided.

Regards,
- Eduardo Lopez

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