I can't comment and I cant up vote, I found your solution helpful.The membership provider on the machine config file was empty. Added the below line from the machine config backup file <add name="AspNetSqlMembershipProvider" type="System.Web.Security.SqlMembershipProvider, System.Web, Version=4.0.0.0, Culture=neutral, PublicKeyToken=b03f5f7f11d50a3a" connectionStringName="LocalSqlServer" enablePasswordRetrieval="false" enablePasswordReset="true" requiresQuestionAndAnswer="true" applicationName="/" requiresUniqueEmail="false" passwordFormat="Hashed" maxInvalidPasswordAttempts="5" minRequiredPasswordLength="7" minRequiredNonalphanumericCharacters="1" passwordAttemptWindow="10" passwordStrengthRegularExpression=""/>

Finally the people picker started working.

I can't comment and I cant up vote, I found your solution helpful.The membership provider on the machine config file was empty. Added the below line from the machine config backup file

<add name="AspNetSqlMembershipProvider" type="System.Web.Security.SqlMembershipProvider, System.Web, Version=4.0.0.0, Culture=neutral, PublicKeyToken=b03f5f7f11d50a3a" connectionStringName="LocalSqlServer" enablePasswordRetrieval="false" enablePasswordReset="true" requiresQuestionAndAnswer="true" applicationName="/" requiresUniqueEmail="false" passwordFormat="Hashed" maxInvalidPasswordAttempts="5" minRequiredPasswordLength="7" minRequiredNonalphanumericCharacters="1" passwordAttemptWindow="10" passwordStrengthRegularExpression=""/>

Finally the people picker started working.