Yes the ISY has it's own rule engine, it can do everything the M1XEP can do rule-wise with Insteon, plus a lot more if you get the Elk module. In addition it will program your insteon switches (add/remove switches/scenes, etc). And it has it's own web interface. With the ISY you can still put lighting rules on the Elk if you want but you have to export your ISY lighting config and import into the M1XEP every time you add/remove/change a switch. It is the more powerful but the more expensive option.
If you go with the M1XSP instead, it's one serial port would be taken up by the 2413S, the M1XEP would then connect to the serial port on the main board. You would not be able to program them see the limitations in the M1XSP manual page 20.
So your options are:
ISY + ISY Elk Module + Insteon PLM + M1XEP
or
M1XSP + Insteon PLM + M1XEP + Some way to program (manually/other software)