the RF modulated setup can work with any radio, and uses a radio frequency (RF) to play XM. It's not the true cd quality that XM has the capability of doing though, but it is cheaper. The direct hookup, which is what I have, uses a XM ready headunit, a XM tuner box, and the antenna. The tuner box sends the signal to the headunit digitally through a cable, keeping the CD quality. I have heard some cars using a RF modulated XM setup sound good, just about as good as a direct setup, but at times you could tell it was RF.
If you do decide to go RF modulated, most of them use the same box for direct link, so all you would need to do is get a XM ready headunit and maybe a cable, and youd be set.

"Anyone who has never made a mistake has never tried anything new."
-Albert Einstein