Why are users are not showing up in the permissions picker?

I'm trying to give individual permissions to a space.  I open the space then Space Tools\Permissions.  I click "Edit Permissions" under Individual Users.  I type the person's name but it doesn't show up in the picker.  To work around this, I then click on the magnifying glass, choose "Membership" tab, search for a group I know the person belong to and then click on the box next to his\her name.  It then populates the name in the box and I can click add.  Why?

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