Well, I ended up uninstalling KP49 thinking that might of been the issue. But in doing so, my n900 got stuck in a reboot loop. Wouldn't get past the Nokia splash screen.

I then proceeded to flash my device. I have reintalled KP49 and the fm-carkit application and also fmradio. Now fmradio is working.

I will continue reinstalling all my previous applications and see which applications breaks fmradio. But I'm betting that it should work fine.

Cheers,
Fred