There is an article on(http://support.microsoft.com/kb/935396#top) how to improve performance of MIIS and ILM2007 by using Nimed Pipes protocol. Will the same technique work for ILM2? If yes, how to reinstall the metadirectory to use the SQL Aliaswith Named Pipes? If no, is there any other way to improve performance?

There is a forum dedicated to ILM V2. You should respost your question to the forum:http://social.technet.microsoft.com/Forums/en/ilm2/threadsPaul Adare CTO IdentIT Inc. ILM MVP

It depends.There is no requirement to reinstall anything. You can reconfigure SQL Configuration on the client and on the server to use named pipes instead of TCP/IP as your protocol. When the SQL Server is colocated with your Synchronization Engine, you will see an improvement in performance by changing this option.AhmadAW