Darren,
Same issue, installed DotNetNuke last week and got upset from a thought that I would need to manually update Display Names for all users in the company (although 60, not 200!). Being a lazy guy, I always search for easier solutions ...
I have analyzed the current source code, and the only way I could fix the issue is by hacking the database stored procedure. But in the end it works perfectly! Modify the dbo.AddUser stored procedure, and check if the @DisplayName parameter is empty, then make it @Firstname + ' ' + @Lastname:
IF ( @DisplayName is null OR @DisplayName = '' )
BEGIN
SET @DisplayName = @FirstName + ' ' + @LastName
END
More so, apparently our AD did not have email addresses properly entered for all users. So I put a hack into the stored procedure to infer the email, if it's emtpy. But you don't have such a problem.
The only downside, is that this fix might be overwritten by SQL scripts if dotnetnuke installation is ever upgraded. By that time I am hoping proper fix will be available, though.
Hope this helps (until official fix is posted).
Cheers,
Lev.