You mean that only with this Software Update policy receving, it has such problem?
And other policies, like SMA settings, Maintenance Windows, etc are successfully received by client?
What says Altiris Log Viewer on SMP 7.5 Server, on attempt to receive policy?
Symantec Management Agent and other plug-ins are up-to-date?
Do you have there "Legacy Agent Communication" enabled on SMP Server?