[Raleigh]

I also have a PACO G-30, and it works fine for aligning this sort of AM radios.

You can easily test whether your AM modulation is working. Attach a wire from the + output of your signal generator and wrap three or four turns around a piece of scrap wood or cardboard, then tune the signal generator to any frequency in the AM band. If your modulation is working you'll hear the tone on any nearby radio tuned to that same frequency. By nearby, I mean a foot or two away from your loop of wire.

Turn the output, level, and audio controls on the signal generator fairly high.

If your RF is working but not your tone modulation, you still might hear some interference with an AM station at the same frequency. Set any radio on an AM station near the center of the dial, and dial your signal generator up and down to see if you can hear any interference with your antenna loop very near the target radio. But I guess you've already verified the RF on your scope.

For the purposes of a quick test, you could probably even wrap a three or four turns of wire around your hand, or a small book, or anything convenient.