Postfix Alias Issues

I am running a fresh install of the latest Virtualmin on Centos 5.4. For some reason the alias table is not working properly. If I set email1@domain.com to forward to email2@domain.com I get the following error:

email2@domain.com (expanded from email1@domain.com): unknown
user: “email2”

It seems that masquerading is not setup properly.

Any Ideas? Thanks in advance.