Do you support Handcent?
Handcent is supported by doing the following:
Go into handcent, settings, application settings, default messaging application, select "disable"
The go into the phones default messaging app and switch off it's notifications (this step varies slighly from phone to phone, but just look in your default messaging app in the settings section)
In light flow, notification, sms apps enable the notification and you should be able to leave "alternate on monitoring" and "alternate off monitoring" both off.
Note contact specific notifications don't currently work with handcent