Also, there is no mention of connecting any wire from the radio
directly to the battery for a continious power source. The main lead
(red wire) is supposed to be connected to +12 switched. The old radio
(that I removed) had a wire connected directly to the battery with a
small plastic fuse casing in the middle. Do modern radios use a
different method to maintain memory when the power is switched off?

Yes, non-volatile memory chips.

Actually new (2008 model) Sony and Alpine car stereos DO loose stored radio
channels
when power is disconnected. Most of them are used in cars and most cars have
a ignition key
(suprise seems like the engineers at Sony and Alpine haven't thougt about
yachts.
One would belive that today when flash memory etc. is very cheap it would be
used
for this, but the fact is that I have not seen any models that keep the
channel settings after
power is disconnected.

On most steres the yellow wire is battery +12V, red is via ignition key +12V
and black 0V.

Regards,
TomS