Physical layer network coding (PNC) is a novel technique that allows two users to exchange messages in a wireless network. The most significant feature of PNC is the exploitation of interference at a relay due to incoming signals from two users, allowing an increase in throughput. In this paper, Extrinsic Information Transfer (ExIT) charts are employed to evaluate the performance of bit-interleaved coded modulation with iterative decoding (BICM-ID) combined with PNC. We address critical design issues to enhance decoding performance and provide analytical bounds on the performance. The analysis is extended for PNC employing Turbo and Low-Density Parity-Check (LDPC) codes to compare the performance with BICM-ID on the AWGN channel. Our results show that BICM-ID with PNC performs very similarly to a turbo-coded PNC scheme but, surprisingly, it outperforms a LDPC-coded PNC scheme, due to the Sum-Product decoding algorithm, which is less robust to unreliable symbols broadcast from the relay and needs more iterations to reach convergence. This shows that when considering trade-offs between performance and complexity, BICM-ID is an attractive coding scheme for wireless relay networks employing PNC.