I am looking at adding a modern radio with XM and also a multi disc cd player. What is a good model for my 1987 XJ-SC. Not much room for most new radio's.

 

It needs to be a single DIN to fit. There are a plethora of units available I would suggest going to a car radio retailer and having a look and listen to a few. This way you can ask questions about the features and ease of use of each unit.

I would not worry too much about the difference in sounds between units as they will sound totally different when installed in the car.

If you are replacing speakers as well do not go down the more is better route. 4 speakers, 2x bass drivers in the rear, 2x 4" coax mid/tweeters in the doors, with Xovers set so the frequency of the bass and coax do not overlap.

 

This place has several that should fit your needs, I bought

this one from here RetroSoundUSA.com - Classic Style Radio Systems

but they have other models. As far as a CD player, I didn't get one since my MP3 can plug into it. Can have more song verity in small package as to caring CDs