Yes, the polarity of the transformers seems correct.
There is an official simulation file in Pspice from Diodes Inc and I tried the simulation with my circuit design. And in simulation it seemed to work as per design. So my initial thought of the inductance being insufficient was not an issue with the simulation.
So I thought the problem might be because of cross regulation and made the following changes
1) I changed R8(pull down resistor for feedback voltage divider) from 13.7KE to 10KE to increase the output voltage during loaded condition but this only increased the voltage by 1V
2) I then modified my pcb such that there was no isolation between the secondary winding and the primary winding ( Shorted GNDD to HV_RECT_MINUS)
3) Regulated to be on secondary winding instead of Aux winding (disconnected VAA connection to R7 & connected VDD to R7)
But even these changes, I was not able be observe the desired output voltage(only 14V was observed)
Feedback Pin:
I probed the feedback signal along with the actual transformer secondary voltage and I observed that during primary conduction period the feedback signal and these spikes were almost reaching 10V & -6V.
This might also been because of the probe. The steady state values were reflecting the transformer voltage.
Current Sense Pin:
I observed similar behaviour on the current sense pin as the feedback pin. The spikes during the primary side conduction were as high as 10V. I had probed the MOSFET source pin and the current sense pin of AL1665.
Comp Pin:
Here I observed the strange behaviour.
I was using PVP3150 probe from RIGOL(termination is 10Mohm and 10pF +- 5pF) and when I probed the Comp pin with this probe, the output was regulated to the desired 27V with no overshoots

. The Comp pin still had spike voltage reaching upto +10V & -5V
When I removed the probe, the output again settled at 14V.
I suspect the issue is either something to do with the layout or the compensation network.
I also changed the C of the RC of Comp pin to 2uF to check if the regulation was fine but the output was still at 14V.
The PCB is a single sided PCB with copper traces only on TOP layer.
My next step is to add 15pF or 22pF capacitor across the COMP pin and check if the output is able to regulate.