Utilizing tristate (bi-directional) pins

First of all, are you using the off-the-shelf I2C component in Qsys (Altera Avalon I2C (Master))? Check the embedded IP user guide for details (https://www.altera.com/content/dam/altera-www/global/en_us/pdfs/literature/ug/ug_embedded_ip.pdf). The guide describes how to set up the I2C connection (pdf page 515), mentioning to instantiate the I/O buffers instead of coding it directly. Your code looks correct, through, for bidirectional I/O.

"Conduit" refers to any Qsys interface that is made up of signals that do not conform to a standard interface supported by Qsys, such as Avalon or AXI. They are usually exported out of a system. A TCM just refers to a master interface that connects, via a conduit, to an external tri-state bus. It does not directly refer to the tri-state hardware found in the I/O cells. TCM is usually found when connecting the Generic Tri-state controller to either the tri-state pin sharer or directly to the tri-state conduit bridge.