D1-D5 systems in N=4 string theories

We propose CFT descriptions of the D1/D5 system in a class of freely acting Z(2) orbifolds/orientifolds of type IIB theory, with sixteen unbroken supe rcharges. The CFTs describing D1/D5 systems involve N = (4,4) or N = (4, 0) sigma models on (R-3 x S-1 x T-4 x (T-4)(N)/S-N)/Z(2), where the action Of Z(2) is diagonal and its precise nature depends on the model. We also disc uss D1(D5)-brane states carrying non-trivial Kaluza-Klein charges, which co rrespond to excitations of two-dimensional CFTs of the type (R-3 x S-1 x T- 4)(N)/S-N proportional to Z(2)(N). The resulting multiplicities for 2 two-c harge bound states are shown to agree with the predictions of U-duality. We raise a puzzle concerning the multiplicities of three-charge systems, whic h is generically present in all vacuum configurations with sixteen unbroken supercharges studied so far, including the more familiar type IIB on K3 ca se: the constraints put on BPS counting formulae by U-duality are apparentl y in contradiction with any CFT interpretation. We argue that the presence of RR backgrounds appearing in the symmetric product CFT may provide a reso lution of this puzzle. Finally, we show that the whole tower of D-instanton corrections to certain "BPS saturated couplings" in the low energy effecti ve actions match with the corresponding one-loop threshold corrections on t he dual fundamental string side. (C) 2001 Elsevier Science B.V. All rights reserved.