As I understand it I need to attenuate the signal just above the frequency I enter (best option).
Due to the way that the DDS generates its output signal, as well as the wanted output frequency, there will be other "image" frequency components generated. Using a low pass filter will remove (within the limitations of the filter) these image components.
Given I am using an AD9851 with internal clock set to 180MHz I am running the DDS at 60MHz.
I am not sure what you are saying here, the AD9851 has an internal 6x clock multiplier, if that is set, then a 30Mhz reference clock input will give you a 180Mhz internal clock.
1. If I choose a frequency say 100kHz where is the first harmonic and why do I have to block it out? Its been suggested I use a variable low pass filter - why?
The "first harmonic" will be at 200khz. Actually the correct term is "second harmonic".
There will also be an image frequency at (180Mhz -100khz) = 179.9Mhz.
Both the harmonic and the image will be very low amplitude compared with the wanted 100khz.
2. Could someone run their eye over the datasheet AD9851... it says you can create squarewaves from the chip.. how do you get square waves out of the chip?
There is a comparator on the chip.
To generate square waves, connect the pins IOUT and IOUTB to VINP and VINN (dont forget that IOUT is a current output, so you will need a resistor between IOUT and IOUTB to give a current to voltage conversion).
A squarewave output will then be available from pins VOUTP and VOUTN.
JimB