Going the FM modulation route is a "cheap and dirty" method, and while it is easy to do, you usually pay for it in sound quality. There are several alternatives for putting in an AUX input to your vehicle:
1. Upgrade your radio module to a 2003 or newer so that you can get the native AUX input (I did this on my 2001 X5 and it worked out great)
2. Install an aftermarket AUX input solution, such as from Blitzsafe or Soundgate. These typically plug in at your CD changer connection.
3. If you have Nav, make an AUX input from your
tape player source.