1. T&C M&M, section: miles and more flight awards, 4. upgrade awards: "An upgrade award is valid only for the route covered by a flight coupon for the ticket." For the longer version look at 4.1. .

2. If the direct NZ flight is considered to be one coupon, you will be fine with 240k r/t for two. But still you need to book in B/Y. On NZ, E,O and U are also fine to upgrade from Y>C.