fwm.elg was pointing to duplicate fw object name and some certificate related problems..
After placing the upgrade_export to a VM test machine, I saw that I can install the policy on it, so I have decided to reset SIC on both members one by one and this resolved our problem.
SmartSPLAT may help you to examine this type of problems..
Load Policy to Firewall
# fwm load $FWDIR/conf/Standard.W FirewallName > /var/tmp/policy_install.ctl 2>&1
Also try
Fetching the Policy from SMC
# fw fetch SMCName
and fetching locally
# fw -d fetchlocal -d $FWDIR/state/__tmp/FW1/
