Splitting large point data layer problem!!!

Hi Folks,
I am trying to clip a point data layer by another polygon file. This point file is pretty large (millions of points - address points in the US). Every time i try using clip or select, it either freezes with "Not responding" or takes forever (~14 hrs with no results). I am trying to use Dice tool, but I am not sure if I can use Dice tool on point feature. If so, what am i supposed to put on "vertex limit"? BTW, the data is on SDE server. I also tried exporting it to the local drive, but with no success. Any help will be greatly appreciated.

Thanks,
Binesh