Symptoms: Some users report that attempting to use the People Picker in a SharePoint List Item results in an “Unexpected Error” message. The affected users have either recently upgraded to IE9 or have new client hardware. Other users are able to use the People Picker without error.
Cause: Security settings in IE9 prevent the tool from fetching the required user information.
Solution: The SharePoint site should be added to a trusted or intranet zone in the browser settings, as described in this post on avoiding multiple authentication prompts in SharePoint.