Hi, @Msdc ,
According to your description, this issue occurs when you try to grant user permission. Do you witnessed similar behavior in other people picker field , like a person & group column? Will all the users in you AD have the same problem? And you mentioned things like "nothing is displaying at all", if you type in domain\userid and click on the check name button, does the user name get recognized?
Besides, I would like to if this issue occur on all the sites in your farm? What is version of your SharePoint? Does the farm experience an upgrade or migration recently?
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