I don't see an obvious problem in your config, but this is what I use, and I do see exceptions in Svc Trace Viewer:

    <system.diagnostics>
        <sources>
            <source name="System.ServiceModel" switchValue="Information, ActivityTracing" propagateActivity="true">
                <listeners>
                    <add name="XTL" />
                </listeners>
            </source>
        </sources>
        <sharedListeners>
            <add initializeData="trace.svclog" type="System.Diagnostics.XmlWriterTraceListener" name="XTL" />
        </sharedListeners>
        <trace autoflush="true" />
    </system.diagnostics>