Well you learn something new everyday! I just tried my AUX jack, and here is
how it worked for me. Turn on radio, put it on FM. Plug in the jack into the AUX
jack and radio auto switched to the AUX input. I played my iPod and then pulled
the jack out, and the radio went back to FM. I plugged the jack into the AUX
again, and it went from FM to AUX. I put a CD in, and let it play. Plugged in the
iPod into the AUX jack and it switched the AUX. Pulled the iPod out of the AUX
jack and the radio went back to CD. I plugged in the iPod once again. Radio went
to AUX. I hit the FM button and it went to FM. Hit the CD button and it went to
AUX. Hit the CD button again and it went to CD. Hit the FM again, and it went
to FM. Hit the CD button again and it went to AUX. Unplugged the iPod and it
went back to FM. I would say that this 100% how it should work.
Not sure if its your radio or your AUX jack. Here is a thread on someone replacing
their AUX jack.
http://www.elementownersclub.com/forums/showthread.php?t=71252
You can also keep an eye on the Trading Post. People will install and aftermarket
radio in their E, and sell the OEM one. Just make sure its from an EX and from
03 - 06. I know the 07+ are different.