Policies with alternatives do not appear to be fully functional when applied at the Binding Operation level. They work perfectly when applied at the BINDING level (So when the @Policy is added at the SEI class level).
I am attaching a test project which demonstrates the problem. This is probably a issue that can be worked around so its not a high priority.
The only reason it became obvious was I wanted to be able to have no policy for operations such as Ping.
Policies which do not have any alternative (so a single wsp:All instead of a wsp:ExactlyOne) work perfectly.