I have a drupal6 site with ubercart module installed. I have also enabled the Google checkout module that came inbuilt with ubercart.
But i am unsure about how to setup a sandbox testing account with Google checkout. Is there any reference or manual for the steps to follow?
You should create sandbox accounts, see more info there.
Here is a detailed document explaining how to use the Checkout Sandbox environment:
http://code.google.com/apis/checkout/developer/Google_Checkout_Basic_HTML_Sandbox.html