Restricting People Picker to single site collection

Typically, users that are already added to a site collection are displayed in the People Picker. This prevents anyone from using the People Picker to browse a different user directory. However, in a hosting scenario, you do not want end users to be able to search users from Active Directory; you only want the end users be able to search users that are already in the site collection.

Restricting People Picker to single site collection

Use this command to check if people picker can only search within a site collection or not:
stsadm -o getproperty -pn peoplepicker-onlysearchwithinsitecollection -url http://urlĀ 

To set the setting, use:
stsadm -o setproperty -pn peoplepicker-onlysearchwithinsitecollection-url http://url -pv yes

Setting custom filter to query AD User

Use this command to create a custom filter that searches for an AD User.
stsadm -o getproperty -pn peoplepicker-searchadcustomfilter -url http://urlĀ 

To set the setting, use:
stsadm -o setproperty -pn peoplepicker-searchadcustomfilter -url http://url -pv (|(Title=David))

For more: http://technet.microsoft.com/en-us/library/cc263460%28v=office.12%29.aspx

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