We were side tracked into some other work and hence could not follow up for this issue.
Since the last discussion we tried the following:
1) Fed the DAC's I channel out to the Q port of the IQ modulator and there was an output (while Q from the DAC was disconnected).
2) Fed the DAC's Q channel out to the I port of the IQ modulator and there was output (while I from the DAC was disconnected).
Status: When the I from the DAC is connected to the I of the modulator, there is not output!
Please advise and thanks for your continued help,