Methods of adaptive soft combining and channel decoding are developed to combat the effects of multipath fading and nonuniform interference channels, with particular application to digital reception in hybrid in-band on-channel (HIBOC) digital audio broadcast (DAB) systems in the FM band. These systems transmit near CD quality digital audio and analog FM simultaneously within the same license band, requiring the digital audio to be protected with powerful channel codes and sophisticated decoding algorithms to provide broad coverage under a variety of fading and potentially severe interference conditions created by first adjacent FM stations. In an example HIBOC DAB system, digital transmissions are DQPSK/OFDM modulated in two sidebands of the analog FM host signal, and a complementary punctured pair convolutional (CPPC) inner coding scheme allows for higher diversity benefit than code combining when both sidebands are interference-free as well as full recovery of the audio information when one of the sidebands is severely corrupted by first adjacent interference. For the intermediate cases in which one of the sidebands is partially useful, we demonstrate via simulations that an unmodified receiver designed for a Gaussian channel and corresponding to equal-gain combining performs ineffectively for moderate to high interference levels. Motivated by a clear need for more sophisticated receivers, we examine soft combiners derived from the maximum-likelihood principle and provide simulated performance bounds for the case in which perfect channel parameter estimates are available. We then discuss more practical methods for performing adaptive soft combining and channel decoding, focusing in particular on an appealing soft selection combining technique, based on successive erasures and Viterbi decoding, that requires only coarse estimates of the channel parameters. An outer code used for error concealment may be further utilized to perform the selection function. The performance of this soft selection combining scheme under a variety of interference scenarios is also evaluated via simulation. Further improvements may be obtained with a list Viterbi decoder.