Unfortunately dproldan has concluded, after disassembling his phone, that the Milestone lacks critical traces and components to support the FM radio capabilities (both tx and rx). So FM radio tuning and/or transmission seems to be completely impossible on the Milestone.
http://alldroid.org/archived/threads/14549.html original thread about FM radio on milestone, as said there they were able to scan for radio stations but without audio. They used libs and apps from xt800
http://www.multiupload.com/4BD1T5ZLM6 system dump from xt800
To use libs and apps from some motorola phone that got fm radio working ( xt701, xt800 )
1. Status: cant scan for anything, reason unknown
Status: cant scan for any stations, reason unknown, tested on Droid and Milestone, works ok on XT701 ( with their bts files )
steps to test it:
cp fmapp for example to /system/xbin/ cp *.bts files to /etc/ cd to some directory where you got write permissions, fmapp will create 2 log files in it turn BT off, if u have it on, then turn it on and run fmapp then press p, if u get any error reset bt and fast run fmapp u also need to reset bt each time u run fmapp press h for command list ?0 to lower rssi threshold to 0 and after that > or < to start seek for some radio stations