1.Are legally purchased graphic and audio packs allowed? I use rpg maker and try to use as little default things as possible.

Yes.

2.Would mild nsfw content be allowed? I was planning on doing a dating sim along the lines of the older life sims I played as a young teen online.

Yes.  Just label your game as age appropriate according to Itch's ratings guidelines.

3.This jam is actually coinsiding nicely with the Strawberry Jam 3 (its a jam with a focus on mild to explicit nsfw, which again, I would only do mildly suggestive), and I was wondering if I could submit my game for both? I still haven't started it and would only work within the two time frames shared (yours actually ends a bit before the strawberry jam). I want to challenge myself with mashing city and mild nsfw themes in a dating sim :D

Given the thematic overlap between the two jams, I'll say you can submit your game to both.  My only request is that put some subtle indication in your game that it's a version for my jam.  It can be a part of the menu screen, it can be embedded into the content of the game itself, it can be just a graphic somewhere... just a token something really.