UPnP is not truly required for anything, as far as I know. It's purpose is to simplify the process of adding new devices in your network. When it works, it works nicely and everything becomes Plug and Play. That being said, if you are comfortable enough to set things up in NAT yourself, then you don't really need the help of UPnP.
I'm not an expert on UPnP so hopefully a better educated person will confirm this.
Your best choices for the xbox, considering you are experiencing issues with the current config is probably.
Open NAT. That requires some knowledge to set up but I Googled and this article should get you started.
OPening up NAT on XBOX This leaves you more exposed than Closed NAT(only for the device you set it up on) but should work better.
If you still experience problems. Go into your router and see if you can set it up to allow for a single MAC address to pass through without any Network Address Translation at all. In other words, Your XBOX will get true IP address from your Internet ISP instead of an internal one from your router and essentially, it kind of bypasses your router altogether. ((Note: By 'bypassing', you are also totally bypassing all the routers security for that single device, but I don't believe that is as serious a concern on a gaming system, as it is on say a PC))
To do this you need to understand how your ISP assigns addresses, do they dish em out via the most common method using DHCP, do they recommend using upnp, and will they allow you to use up more than one internet IP per customer (you are already using one on your router.) Also, do they demand you authenticate with PPPoE (yet another protocol).
As you can see, it can get very confusing. If you can manage to configure your router to do open NAT for the 360, you can ignore the above questions, which is why it may be the best solution.
As for your last question. There is normally nothing wrong with leaving upnp enabled for everything else unless it causes problems, like on the Denon. If you can't turn it off for just the Denon, then sure, just disable it altogether. It adds no benefit except for simplifying putting new gear on a network and you already seem to know enough to be able to do that without it's help.
Also, upnp used to open up some security flaws due to the way it simplifies things. A serious vulnerability when playing an infected Flash file is one I can think of, but that may have been patched by now. I usually recommend it for less technical people as it normally solves more connection problems than it creates.
