I also had problems unlocking this one, even once I had all challenge games unlocked and played online matches vs several people who did not have them all unlocked. I also tried playing with a second xbox live gold account that had no challenges unlocked and that did not work either.
Here is what I found to work, no game save deletion is necessary...
Get all the challenges unlocked and find a boosting partner that also has all the challenges unlocked. Make an online game and have each person sign in a guest account player so that all 4 slots are filled (I did a custom match with 3 races and 3 challenges in between with races on reverse, but this setup probably isn't critical).
The achievement should unlock within the first few challenges, but only for the host. If your partner also needs the achievement, repeat again with him as host.
Jaod and I did this method and worked for both of us first time.