I've heard that you can't have both and iPod adapter and satellite radio hooked up. Can anyone tell me if that's true?

 

I just today installed my XM radio and already had my Ipod installed. The Ipod works thru the aux connection on the back of the radio and the XM is connected in the back thru a Blitz box.

Yes , it works great just push the mod button on the radio to go from one to the other.

 

Whoever told you that is not very intelligent (or up to date on electronics).
My 1st-Gen iPod works fine, as does the XM, CD, and over-the-air radio.