I got it working, had to hit "discover" on the alerts section. Unfortunately it still sends an email to the user when a reply is posted. If I disable it in the Kunena CP it stops sending emails and alerts.
I also tried enabling emails in kunena, and disabling it in the alert, but it still sends an email. When you have emails enabled on the alert, it will actually send 2 emails.
Basically the goal is to only send a notification, so we can buy the push notify app and have it handle everything.