I would "Forget" to go back to that dealer and find one that is not run by people with memory problems!
If you are having issues with the Toyota dealership, call Corporate Toyota offices and let them know. 310-468-4000 Meantime, try another Toyota dealership in your area. You may just be dealing with a poorly run service shop.
I have long agreed - the sound quality is horrible - and that's across many rental cars and now our Prius which is the first car we've ever considered paying for the service in. While I like some of the stations, the sound quality is so poor that I have a hard time listening for any period of time. I'm particularly sensitive to digital compression artifacts though - many people obviously are not.
I agree with everyone. My first time with XM and it does drop off. I have always had Sirius for years and never had any drop outs. I am not that happy with it. Glad to find out it is the XM station that is the problem and not the car.