domain cloak and redirect shows just the root domain everywhere?

[JTCB]

I'm putting up my first website using AlterVista as a hosting.

I have bought a second level domain from you with redirect and I am trying to set it right.

normally my page would use http://[domainname].altervista.org

I don't want anyone to see the altervista part, obviously after I have bought the second lvl domain.

The redirect works fine, when I open my [domainname].com the page loads but ends up with the same http://[domainname].altervista.org

That is why I have enabled something called "cloak". Domain cloaking?

In subdomain/redirect part I have http://[domainname].com to redirect to http://[domainname].altervista.org and http://www.[domainname].com redirecting to http://[domainname].altervista.org.

... Now, the problem is that this isn't working for me as expected?

I wanted to have it like

[domainname].com/index.php
[domainname].com/index.php/projects
[domainname].com/index.php/contacts...

and so on.

But all I have now is no matter what part of the website it's always a static:

[domainname].com



What is wrong and how to make it work as I want?

---
EDIT1:

Ok so I've read up a bit... and turns out URL cloaking/masking is not good for SEO.
So I don't want that.
And I think the problem is that while my domain (one I bought from you) is a softlayer domain, it's not really AlterVista's domain.
So in the end I always am forced to use domain.altervista.org anyway.
Since this is mostly a free hosting and the domain redirect thing is just so I can give people the domain.com when they ask for the link.

Is this correct? Can you confirm?

So in the end I need to look for another hosting, eventually, one that offers hosting + domain without using 3rd party domain registrar.
Or is what I want to achieve possible on AlterVista after all?