This post should be part of the brain dump series but I never got around to do actually posting it and I sort of needed it last week, at any rate.
A pretty simple command to allow users from other (trusted) domains to be added to SharePoint site:
stsadm -o setproperty -pn peoplepicker-searchadforests -pv "domain:prod.local,prod\ppSP,<password>" -url "https://sp.dev.local"
In our case the problem was that we could not add users from the prod domain, which we use to log in to our machines to the development environment, which we use, well for development :).
So we created an account in the Prod domain, ppSP, to allow the AD lookups to take place. There needs to be a domain trust between the domains, if there isn't then, you should be looking at claims authentication.