Did you create your actions using a template or did you create a custom action. It sounds like your milestones are working fine but your actions related to the milestones are not.
I've experienced similar problems when using custom actions to send emails. When I made templates that does the exact thing my custom actions did it worked. I never looked in to why. Might be worth a try for you.
Thanks Lifeson for providing this solution,
Could you please give some more informaiton about Service target templates. I have tried to create it by going through SLM administration pdf, but couldnt get it correctly.
This issue is resovled internally. We have define assignee in milestone notification and support team were not selecting assignee.