I have added Everyone except external users to the Team Site Visitors group. Below is the screenshot for the same.

Now I have tried to search for one user in the People Picker but the user does not appear in the search results. Below is the screenshot for the same.

The user I have searched in the auto-complete is the user of our organization. Below is the screenshot for the same.

I have used the below code for getting site users from the SharePoint User Information list.

export const getSharepointUser = async () => {
    const sp: SPFI = getSP();
    return sp.web.siteUserInfoList.items
        .select("*,ID,Title,Name,EMail,JobTitle,SipAddress,WorkPhone,MobilePhone").getAll()
        .then((res) => {
        console.log("res..", res);
            return res;
        })
        .catch((err) => {
            console.log("err..", err);
            throw err;
        });
};

Why did the user not appear in the search? Does anyone have an idea?

Thanks