This is an interesting problem which only occurs when the people picker is being run in IE9 mode. You may find older versions of IE work without issue and other browsers too. A quick server side fix can be implemented by opening the pickerdialog master file and editing the header. The file should be located here: C:\Program Files\Common Files\Microsoft Shared\Web Server Extensions\14\TEMPLATE\LAYOUTS\pickerdialog.master
Simply add the following to the top of the file using your favorite text editor.
<head>
<meta name=”GENERATOR” content=”Microsoft SharePoint” />
<meta http-equiv=”X-UA-Compatible” content=”IE=EmulateIE8″ />
You should then perform an iisrest. Either use the IIS graphical tools to do this or in an eleveted command window run IISRESET /noforce
As always take a copy of the master file before editing and if possible test this change in your dev/test environment first. (You do have one right?)
This doesn’t work. Actually made the picker control worse for me