I've had the PAL installed in '08 GXP about 4 months ago. Same problem others reported with XM going out and flipping to XM0 with or without an iPOD. Maybe once out of three times, you can get the iPOD to work. GM support acknowledged it was a firmware problem with the PAL and I have an open "incident number" with their engineering group.
Last week GM released new code for the PAL; the new code is an improvement - XM is only unavailable if you have an iPOD plugged in. Once you remove the iPOD, everything works just fine (oh, the iPOD doesn't work at all).
They've sent the information back to GM for more "guidance." I was just read about the wire cut that differs from the instructions - next time I'm at the dealership I'll talk to them about it.