We've also set up a room in the studio (which, in case you're wondering, is a completely legal 'internet' radio station). Several mics, a nice big mixer and a dedicated recording computer. This allows a band to set up and do a live show in the studio (which we record... something we call "Studio Free").
That signal is streamed out over the internet for anyone to listen to.
The broadcast part happens with the STL (a computer, mixer, wireless connection to a nearby 802.11b router in the area) and a transmitter with a 1/4 wave antenna up in a tree (the whole set up sits in an outdoor waterproof box). We log into the STL with WinVNC and simply 'stream' the signal from the 'internet radio station' studio.
Viola! Live band on the air... but the two are completely seperate.