Good Post ECF,

A couple of other small differences to note:

-XDM has a higher capacity magazine (16 rd. mag vs. 12 rds in the origional service model XD .40)

-you can change the back strap on the grip for variation in grip size

-has better recoil system (heavy duty guide rod spring)

-Also, the newest XDM models have an even more different contoured slide.

- There is a new XDM compact that was just released.

For what it's worth:
I've had three XD's in .40 Smith and Wesson and one XDM40. I kept XDM40 and will pick up a XDMC 40 when it's available. My cousin had shot both the XDM and XD and decided on the XD. For him it just fits him a bit better. I've watched him hit small targets at one hundred yards with his XD40 (I cannot do the same with either gun). He owns two XD40s and won't trade them for anything.

Both are reliable, ergonomic, accurate and affordable pistols.