I dont understand your picture, sorry. But i think policy based and VTI is not correct.If you want to connect the 2 networks then it can be policy based and you have to setup the mode to "tunnel" in phase 2.If you want to route over the networks (reach another network behind) you have to set the mode "route based" and then you have a VTI (Virtual Tunnel Interface) only for the ipsec. Then you also have to add a gateway and set routes on both sides. And make sure you have unchecked policy based in phase 1.