Question: Can you use Side Step while carrying a body?

Answer: Yes

Question: Can characters or monsters with a boon or ability that says “takes X points of damage from Slay or Assassinate” use a Side Step to stop the damage.

Answer: Those characters still cannot Side Step those attacks. You also can’t use a Defense or Vigilance spell to convert an attack to damage then use a Side Step to stop the damage. The fact a character takes an alternate effect from an attack does not alter what defenses are relevant to stop that attack before it affects them.