If we are talking about the same squelch, it should have no effect on transmit. Its only function is to activate the speaker when the received signal exceeds a certain level, sort of like VOX in reverse.
The radio should switch to transmit when Digirig activates PTT. You can simulate that using the method discussed here:
To confirm that there is audio output from Digirig, you can just plug regular headphones into the audio socket and you should hear the sound on one side during the transmit frame.