Thanks Josef for posting the example. You pointed me in the right direction.
However, I could not import the policy and it took me some time to figure it out as the policy files are pretty new to me. Then I modify existing policy Username_Signature.policy and remove all other stuff ale kept only the SignedSupportingTokens section and changed ID and name and I was able to import it and now I am finally able to invoke my webservice :lol:
Your typo in the policy file was
wspolicy
instead of
<wsp:Policy>
.
Here is my policy file. Hope it helps and saves some time other developers dealing with the WS madness 
<wsp:Policy wsu:Id="Username_Token" Name="Username and Token"
xmlns:wsu="http://docs.oasis-open.org/wss/2004/01/oasis-200401-wss-wssecurity-utility-1.0.xsd"
xmlns:wsp="http://schemas.xmlsoap.org/ws/2004/09/policy">
<wsp:ExactlyOne>
<wsp:All>
<sp:SignedSupportingTokens xmlns:sp="http://docs.oasis-open.org/ws-sx/ws-securitypolicy/200702">
<wsp:Policy>
<sp:UsernameToken sp:IncludeToken="http://docs.oasis-open.org/ws-sx/ws-securitypolicy/200702/IncludeToken/AlwaysToRecipient" />
</wsp:Policy>
</sp:SignedSupportingTokens>
</wsp:All>
</wsp:ExactlyOne>
</wsp:Policy>
#webMethods#Integration-Server-and-ESB