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Getting from Dubrovnik to Montenegro

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Trying to figure out how to get from Dubrovnik to Montenegro in early September 2009. We had wanted to rent a car in Dubrovnik and drive around Montenegro, but I was told by one car rental agency that currently no cars are allowed from outside Montenegro into Montenegro. Unsure if this is true.
Does anyone know if currently we can rent a car and drive into Montenegro?
And if not, then I know we can take a bus from Dubrovnik to any of the towns in Montenegro, such as Kotor....but then we want to hop from town to town after it easy to get buses throughout the day going to different towns in Montenegro? Specifically we want to go Kotor to Budva, stop in Sveti Stefan, and then the next day go on to Podgorica to catch a flight.

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