Recently I installed MOSS SP2 in one of my servers and there after my people picker stopped resolving the entries.
After a deep analysis i found the issue and solved it.
The App Pool account associated with all the MOSS Web Application including SharePoint Central Administration 3.0 is using a local account within the same box. Now this account is being used by ASPNETMembershipServices to resolve the entries which is failing.
As a workaround i changed the App Pool account to a network service account and it started working.
I followed the steps as I already mentioed in my previous post http://sharepointstuff4u.blogspot.com/2009/10/how-to-change-app-pool-account-of-moss.html
To change App Pool account of SharePoint Central Administration 3.0 Web Application I used STSADM command "UPDATEFARMCREDENTIALS" by passing the credential values.
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