Strange Issue with SMTP Aliases in SBS 2008

Hi All,
I thikn this is quite challenging.
Installed an SBS Server that WORKS just Perfact after a fresh installation except one Issue

Issue
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Email Domain name is allupallup.com.au and internal domain is allupallup.local

When emails sent from internet to username@allupallup.com they are never received

When when send to userfirstname.lastname@allupallup.com they are received OK.

I have recreated Email policies several times and Intially user first name . last name was highlighted as Primary default SMTP Alias whic is changed to username now.

But Exchange is unable to receive email to username@allupallup.com

Also Exchange was loaded with SP1 Rollup Pack 9 and after couple of restarts it is still showing OLD SP with rollup pack 6. i.e. Showing version 8.1(Build 240.1)

Prompt help would be appriciated.

Thanks,