To clarify the issue a little, when we try to add a user to a MOSS site, we get a result of domain\username instead of users full name appearing in MOSS People and Groups. But it won’t let me edit the details such as name, work phone number or email. It’s all read only.
To update the details, you need to do the update at user profile level.
· Navigate to Central Administration page (start > administrative tools > SharePoint 3.0 Central administration)
· Select your Shared Service provider
· Select user profiles and properties link
· Select view user profile link
· Find the account of the user and select edit
· Make sure the Name field contains the name you like to be displayed rather than domain\username
· Give it about 30min and test it out