Hi, Mo,
Yes, you can use DC voltages for I & Q inputs (with a 0.5V common-mode bias on each pin), and they will change the amplitude and phase of the RF output accordingly.
As for sideband suppression test: please check to make sure the DC common-mode level is 0.5V at each baseband input pin, and the amplitude is 0.7Vpp at each pin as the "standard test condition" described on the datasheet. That's how we measure the sideband suppression reported on the datasheet. What signals (freq./amp./waveform) are you using in your FM test? With sinewave inputs, the higher order components should be very low (< -40 dB from the fundamental, I would expect). Are you adding a differential dc offset to the input signals?
Benjamin