From Active Directory User Display Name instead the user display name is like i:0#.w|mName|accountname
mName = membershipprovideraliasinCentralAdmin
accountname = account in Active Directory
1. You would need to run a PowerShell command for the –Web parameter being the SiteCollection URL.
2. You would need to login to that Site Collection at least once for the script to update the Display Name. This is something like alerts on a site will work for the user if we would have logged into that site collection at least once.
Set-SPUser “i:0#.w|mName|accountname” -Web http://sitename -DisplayName "Neelam Gupta"
http://technet.microsoft.com/en-us/library/ff607827.aspx
And the SharePoint uses “i:0#.f” for Forms based authentication and “i:0#.w” for Windows based authentication . The issue is it doesn’t set the display name as compared to the Windows Authentication where you dont have to configure Forms Based authentication using a membership provider. As per my understanding the issue is with the LDAP membership provider which doesnt pull the Display Name from the Active Directory DisplayName.
Please refer the below links :
http://www.woaychee.com/index.php/sharepoint2010-spclaimprovidermanager-i0w/
http://blogs.msdn.com/b/alimaz/archive/2011/02/12/sharepoint-2010-people-picker-and-claims.aspx