Add User - Browse does not return results

[wm5]

Hello,

I am configuring SharePoint for the first time and am having a problem with the "Browse" option when adding a user to a site.

I am using SharePoint MOSS 2007 Enterprise edition on a Windows 2003 Server and MS SQL 2005.

Problem: When I login to my top level site (same problem with Central Administration site) and go to People and Groups and click "New" I get the Add Users form.

The first box is where you can list users and if I put in a user by domain and user name (i.e. domain\username) I can click the "Check Names" icon at the bottom of the text area and the name is verified.

However, if I use the browse icon to search for a user by name I get no results. Even if I search by domain\username

I am using Beginning SharePoint 2007 Administration by Wrox as a reference and as suggested am using a local user for all of the SharePoint services.

My first guess is that SharePoint does not have access to the Active Directory but as stated I can verify a name when using domain\username.

I have done two fresh installs and cannot find any steps that would resolve this problem.

Thanks for any help with this issue.

wm5.