The upgrade waitlist should contain only passengers who are confirmed and ticketed for the flight. In this case it would be people hoping to use GUCs. IIRC mileage upgrade awards must clear 24 hours before the flight, so these would appear only on the upgrade list if someone is first flying a connecting flight so that they've checked in but it's before T-24 for the D1 segment.

With few exceptions, nonrevs are not "upgraded" into D1. They clear the standby list directly into D1 if space is available, and then into PS, then C+, then regular coach seats in priority order from the list, based on seniority, etc. Nonrevs normally are listed on the standby list, not the upgrade list. An exception might be a nonrev traveling on a confirmed ticket (certain travel on company business), not NRSA, who is eligible for an upgrade.