What you are describing is normal behavior.
Look at it like this - There is really only one "external" input to the stereo from all the add-on devices (XM, External CD Changer, and rear seat DVD). As a matter of fact, all of the outputs of these devices are wired together and tied into the one master input of the head unit (of course all the left channels are tied together, and all the right channels are tied together).
Now that you know how the wiring is setup, you can understand why you cannot listen to XM in the front, and DVD in the back. Both devices would be inputing their audio signal into the head unit at the same time!
In a nutshell, only one "external" device can be used at a time.
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