Receiver sensitivity
When I mentioned weak signal effects of a broken Nav antenna, it doesn't matter what relative position the test set is in - normally in the cockpit or sat on a wing. We're not looking for the just the bearing accuracy during a test, but also receiver sensitivity, and this will show up even with correct bearings, because the fail flag will drop into view far to early when the test set output is attenuated.
Incidentally, the fail flag does more than just indicate a satisfactory received signal and unit power. If the converter detects loss of either VOR 30Hz signal (reference phase or variable phase) it will also drop the flag. Similarly in LOC mode, if either the 90Hz or 150Hz signals of the ILS are missing, the flag should also appear, otherwise the CDI could indicate full deviation based on just one side of the ILS beam being received.