Ring around wire on diagram

That's shielded wire. The ring around it is the outer shield around the cable linking the two parts together. The shield also provides the low side of the signal, so it needs to be connected to the ICs as well; it's the other half of the complete circuit. That T connection you mention is just showing that the shields for all the wires are connected together.

Felthry is correct. Normally this would be either small gauge coax cable or shielded hookup wire. Note that the shields are connected to various terminals, jacks, etc. The shield is not just 'floating' and surrounding the central wire. The note regarding isolation is to prevent noise from getting into the system from the airframe. An example is:

https://www.mouser.com/ProductDetail/Alpha-Wire/1703-SL005?qs=%252bd%252bj5ZauFZ%252bci10Syv%252bbmA%3D%3D