Yep, Gsync only works in conjuction with vsync, if you turn off vsync (in the NCP) then you still get tearing at frame rates above the refresh rate of the display.
From what I have found, the in game Vsync option does not work great when using frame generation.
The easiest way to work around this if Gsync is not available and when using Frame generation is to set a frame rate limit using the nvidia control panel. This will introduce a small amount of latency but not a massive amount.