Step 3: Now for the hard part...
The most finicky part is the FM transmitter. Make sure it is positioned outside your car, and high enough so the top of the antenna is above all the other car antennas. FM antennas transmit sound in an umbrella shape -- any antennas positioned above the transmitter will get much less reception. Also, electronic interference is a common problem - be sure to wrap the ends of your audio cables in Ferrite (magnetic) filters, which you can get from RadioShack or somesuch geek playground, and choose thicker cabling when you can.
If static proves to be abundant, try isolating the cables and equipment from the metal frame of your car (if the interference is coming from the car's power) or grounding the transmitter. Isolating the transmitter itself with a 1ft tall box (I use one of those plastic storage bins you can find at Target) can usually reduce any audio distortion.
The diagram below is taken from my tutorial on mobmov.org and shows how you'd connect it up: