SNMP Trap Viewer Hostname and IP addresses are all IP

The actual content of the trap itself never uses hostnames, only IP addresses. In addition to sending out the body text of the trap in your email alert you could try including ${HOSTNAME} or ${CAPTION} to get a more meaningful identification of your devices. Orion NPM will interpret those variables from it's own database rather than doing a DNS lookup or just using an IP address.

my email alert is generated from Trap viewer. the ${HostName} gives me IP addresses instead of hostname..

how i can make it to resolve to hostnames? anyway for it to point to a hostfile?

Try using ${Node.DNS} or ${DNS} which should perform a reverse lookup on the IP and show full name if it's resolvable.  If you have a hosts file on your NPM machine it should look there first then the configured DNS servers.  I would test your name resolution from the server at the command line.   nslookup will test the reverse dns lookup from your server.

Also if you find out you had a problem with dns resolving the names for you and add a hosts file or another dns entry on your server to get it working... force a rediscovery on those nodes and it should update with the names.

i added the hostfile on the server, but same problem.

doing a nslookup on the command prompt resolves ok.

What else can be done?

The good news is it sound like name resolution is working.  When you create alert for email from the Advanced Alert Manager have you tried in the trigger actions section putting variables in your alert action under send Email/Page.  Here's a good thread with links to the variables you can you and pacetti had some good links on how to use them.

Under manage nodes do the devices who's IP's you see in the traps do the nodes have the real names and not IP's?  In advanced alerts you should be able to use the ${Node.DNS} variable which should show the fully qualified domain name from DNS for the node in your trigger action that you can email or write to the event log.

my alert is configure in trap viewer. not advance alert in system manager

So in your list of traps in Trap Viewer under current traps under IP address you see the IP but also under Hostname you still see the IP?  The trap viewer is supposed to a reverse dns lookup then to write to the db.  Maybe try unchecking remove domain name from reverse dns lookups under Trap Server settings under the Trap viewer and see what happens.  If this keeps continuing since you've already verified that reverse dns lookups work from the command line I would open a ticket with support.

I modified my settings in Trap Viewer and it looks like I'm starting to receive traps with the IP and Hostname in my email alerts. I am noticing that it's not working for all devices and those that it's not working for are in DNS (via nslookup from IP to name and from name to IP).
Can you provide more details on how to have NPM re-discovery all my nodes and node names? Do I need to manucally run "list resources" or network discovery? I don't want network discovery to mess up my managed nodes. Am I missing something?

Thanks,

No I think you can go into Manage Nodes from the webpage.  Select the nodes you want from the list with the checkbox then go to pull down called more actions and select rediscover.  You can do one node first as a test but from my experience doing this rediscover doesn't screw up any of your already configured interfaces you've managed under manage nodes.