  This is the second paper of a series where we study the clustering of LRG
galaxies in the latest spectroscopic SDSS data release, DR6, which has 75000
LRG galaxies covering over 1 $Gpc^3/h^3$ for $0.15<z<0.47$. Here we focus on
modeling redshift space distortions in $\xisp$, the 2-point correlation in
separate line-of-sight and perpendicular directions, at small scales and in the
line-of-sight. We show that a simple Kaiser model for the anisotropic 2-point
correlation function in redshift space, convolved with a distribution of random
peculiar velocities with an exponential form, can describe well the correlation
of LRG at all scales. We show that to describe with accuracy the so called
"fingers-of-God" (FOG) elongations in the radial direction, it is necessary to
model the scale dependence of both bias $b$ and the pairwise rms peculiar
velocity $\sigma_{12}$ with the distance. We show how both quantities can be
inferred from the $\xisp$ data. From $r \simeq 10$ Mpc/h to $r \simeq 1$ Mpc/h,
both the bias and $\sigma_{12}$ are shown to increase by a factor of two: from
$b=2$ to $b=4$ and from $\sigma_{12}=400$ to 800 Km/s. The later is in good
agreement, within a 5 percent accuracy in the recovered velocities, with direct
velocity measurements in dark matter simulations with $\Omega_m=0.25$ and
$\sigma_8$=0.85.
