And Nuendo processes internally with 32-Bit Floating Point operation, so even if signals are above 0dbFS, there shouldn’t be any distortion.
Yes internally. But if something is higher than 0 dBFs on the audio output it will clip. If the stereo to mono conversion is done for example in the control room you will not see this clipped level on your meters.
I had this problem recently for a mono monitoring output (Nuendo 8). Mono summing was the culprit.
I can’t see another reason. A bug in the Test generator seems very improbable.
Check the level on the audio output, using an external meter.