I have a 2004 with business cd and Sirius. My Sirius module is located next to the battery. To get to it you have to:
Remove the spare tire
Remove the air compressor (remove 4 screws then flip it on its backside)
Remove the cover, there are 3 screws that hold it in place
I have highlighted my Sirius module below. The 3pin connector on the left is power. The 5pin is sound. One of the connectors on the right is for the antenna. I am not sure what the 2nd one is for. You may be able to figure it out by going to the home page and looking at the Sirius install instructions.
1. Probably not. I believe the BMW connector is a FAKRA connector.
2. BMW uses its own connector types. Also the radio needs to detect that the Sirius module is there or it won't even show it as a source option. If you really don't want to use AUX then you can get a Blitzsafe CD Changer emulator and run the sound through it. This means you will need to run RCA cables to the trunk. You will also need to get an extension cable that runs from the Sirius. In the picture above I have a black cover that is over my extension plug. It is sitting to the right of the 5pin. Basically the extension plug gives you another 3pin and 5pin (these connect to Blitzsafe). This will mean that you have to put your radio on the CD Changer source whenever you want to play the Sportster.
3. That Sportster looks to be about the size of a portable GPS. You should do a search on here for portable GPS (or garmin, tom tom) and you will get some threads where people have talked about this. There are many options to choose from.
4. You should be covered. I would call them and see if they will fix it under warranty. My 2004 has about 47000 and my antenna is still perfect. Note that it is always garaged and we have very mild winters here in Phoenix.