Hi John,
SINAD (signal to noise and distortion ratio) is a rather simple measurement of signal quality.
In the radio industry it is used as a standard for measuring input sensitivity of receivers. This is done by choosing the minimum acceptable output SINAD (generally 12 dB) and a signal frequency (1 kHz was mentioned in your post but the RSA306B cannot go that low, a frequency between 9 kHz and 20 kHz must be used instead).
With that information and with equipment monitoring the output of your test receiver, a signal is fed into the receiver and its power level is decreased until the SINAD measurement goes down to 12 dB.
So, for example, if the receiver reached 12 dB SINAD at 0.5 uV, that is its sensitivity. It's the lowest power input level for which the receiver can still output an acceptably clear audio signal.
So, to summarize: the RF frequency generator should be connected to the input of the receiver you are testing, and the output of that receiver to the RSA306B.