I recently installed a xm2go portable into my car. It is hard wired
into the Alpine head unit via AI-Net cable normally used to hook up CD
changers, etc.

My problem is when I hook it up correctly buy using the line-out from
the bottom of the cradle to the head-unit, there is a terrible buzzing
noise. Most of this noise seems to be coming from the cigarette power
adapter, but by pulling it out it still doesn't completley quit. It
also is not very loud at all, very weak signal with or without the
power plugged in.

Here is the goofy part...When I hook up the line-out (line-in to the
head unit) by using the headphone jack output, it does not buzz at all
and the volume seems to be normal with the power adapter plugged in and
operational. I normally wouldn't mind this, but it makes the quick
swappable thing annoying, and it gives a messy appearance with wires
coming out of the top and bottom.

Is this some sort of grounding or cradle issue and what the heck can I
do about it? Any ideas??? Thanks for your help!!

Im no electronics expert, but it does sound like a ground may be at
fault. Try running the Hu's ground to a different location, nice solid
clean bare spot away from the dash. Or could also be interference from
another 12v source wire spilling over.
Could also use a voltmeter to see if theres another 12v source you can
tap into instead of using the cig lighter source.