I was having major issues getting the people picker to work in a one way trust scenario. Here is what helped me get it working:
1. Ensure that the AD trust is working correctly. This can be done in Active Directory Domains and Trust on the Domain Controller.
2. The Farm Account should be a member of the local machine’s administrator group.
3. On the “HKLM\Software\Microsoft\Shared Tools\Web Server Extensions\14.0\Secure” registry key ensure the following permissions are in place and are being inherited in the sub-keys
* WSS_WPG Read permission
* WSS_Admin_WPG Full Control
* WSS_RESTRICTED_WPG_V4 Full Control
4. Get and copy the peoplepicker-searchadforests property value via stsadm command:
stsadm -o getproperty -url -pn peoplepicker-searchadforests
5. Clear the peoplepicker-searchadforests property value via stsadm command:
stsadm -o setproperty -url -pn peoplepicker-searchadforests -pv “”
6. Rerun the password encrypt command with different password:
stsadm -o setapppassword -password
NewPassword can be anything you want.
7. Set the peoplepicker-searchadforests property value via stsadm command:
stsadm -o setproperty -url -pn peoplepicker-searchadforests -pv
Credit for this list goes to http://www.agrypnia.com/blog/2010/12/22/sharepoint-2010-there-was-an-error-in-the-callback.html
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