Hawkeye, what you are experiencing is common with this and similar board designs.
The info im giving you came from a Galaxy factory tech many years ago.
the symptom is a very noisy receiver that will exhibit an S meter deflection even with no antenna connected.
the problem is the antenna coil, the one right before the Rf amp transistor.
in your radio this is L6.
the cure is to do the receiver alignment like normal, then unhook everything from the antenna jack on the radio.
radio on, RF gain at max, volume up. AM mode.
de-tune L6 just a bit and the noise will fall right off. it won't take much adjustment.
now you can check your work by putting the sig gen back into the radio so you can see how much sensitivity you lost. it won't be much at all, and once someone connects an antenna to the radio that brings in atmospheric noise, it won't matter at all.
give it a shot and let us know what you think.
LC