AltaVault does not manage the actual "images" - that is done by the host backup app (NBU in this case). AltaVault handles the translation of those NBU image files into the corresponding subset of deduplicated slab files which are stored in cache on the appliance, and the global set of deduplicated slab files which are in the cloud storage provider. In other words, only the backup app is responsible for handling the image life cycle - AltaVault simply maintains the data that corresponds to those images.
You can use the prepopulation GUI interface page on the AltaVault appliance to see the % locality of any one of your NBU backup files on cache, and correspondingly the % that is in the cloud. If you feel that there are images that AltaVault is aware of that NBU isn't, you'll be able to see the backup files here and figure it out.
Could you also let us know, how AltaVault stores a file.
Eg- My backup application writes single file of XXX MB/GB to NFS mount of appliance, then would AltaVault further break that file into smaller files and keep its reference with its internal DB engine and store it or would it just deduplicate the data inside file and save it as a single file like backup application handed it over ?
AltaVault deduplicates the incoming data into variable length segments using a hash algorithm which is maintained on the appliance cache. The deduplicated segments are collected, compressed and encrypted into larger 2-4 MB chunks called slabs. The slabs are stored on disk cache of the appliance, and a copy is also sent to the cloud provider, along with other associated metadata to recover the data in the event of a disaster. You would need another AltaVault appliance with the configuration and encryption key of the original appliance to pull any data back from the cloud.