Dear Abhishek,
Your MWE is very clear so I felt like understanding it.
I think the 1+3 of xAct is OK there.
As far as I can tell nothing is wrong there, and here is what I think happens :
In the first case the Contractmetric moves the position of some indices, hence you end up having
Lie derivatives of tensors or vectors with indices up in one case, and not in the other case.
Since the Lie derivative is not compatible with the metric in general, you cannot set by brute force that all Lie derivatives vanish.
That would require LieD[u][g[a,b]] = 0 which gives D_a u_b + D_b u_a=0. Contracted with u^a and the normalization of u, this implies that the acceleration must vanish.
You can notice that the difference in both expression involves the acceleration in all terms.
This is because you would need to also set acceleration to 0 to have the right to remove all Lie derivatives, regardless of index positions.
I hope this helps,
All the best,
Cyril Pitrou