I still think the Feds knew about section 31 being behind this (simply because Bahir told them). But if the parliament debates over this, wouldn't the world know about this whole affair afterwards? Or are those secret deliberations only high ranking military people like Sisko know about?
I can see how Bashir's conversation would have gone.
"You guys have to believe me! There's this secret organization that's like the Tal Shiar or the Obsidian Order, but they're part of the Federation...kinda! And the cure for the morphogenic virus I got from one of their operatives, who tried to recruit me, using a Romulan mind-probe and tricking him into thinking that I had already come up with a cure!"
Federation Council: Well, gee! That sounds plausible!
Or, you know, the more believable scenario is that the Council was told that there was a cure from *somewhere*, and, instead of focusing on where it came from, they focused on, to them, the more important aspect: what to do with it.