Elgg and input/userpicker usage

I am trying to use input/userpicker but it does not search on typing the user name. What is the correct way to use it. I could not find an example that can guide me. Theme preview shows a userpicker but there also it is not able to search and allow selecting the user.

When I set a breakpoint in engine/lib/input.php#input_livesearch_page_handler(). I see that the correct result is returned but somehow is not getting rendered.