Simon, log in as System Admin and edit a domain.  Under the Limits tab, you should be able to specify the number of permitted domain aliases.  As Merle replied, this is a per-domain setting with the default being 2.

Simon, you will receive that message if the domain alias MX record cannot be properly resolved by DNS (if the "Verify MX record in DNS before add" is checked).  It is important to note that you must own each domain you're using in order to create a domain alias.  Additionally, messages cannot be retrieved with a domain alias email address  unless the domain is properly registered at a domain registrar.

 

If you are creating a domain alias for internal use, uncheck the "Verify MX record in DNS before add".  Now internal SmarterMail users can send to the domain alias.