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the only possibility allowed in the drop down box for the ADS0, nCS0 pins is "As input tri-stated"
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Yes, this seems to be a Quartus "special" with Cyclone II. The Altera SFL MegaFunction is however working correctly with exactly this setting, obviously using ASDO, NCSO and DCLK as output in user mode. So I would expect altasmi to work as well, despite of this setting.
Another option is to set PS configuration in Quartus, but actually configure AS with MSEL. Then you get free choose of dual-purpose pin configuration again. I didn't try with Cyclone II, but I needed this workaround with Cyclone III due to some oddities of previous Quartus versions.
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