A couple of points...
1. Yes, your one-day ticket is still valid. You're correct that you do not need the no-expiration option for a ticket that's never been used.
2. Yes, you can use this one-day ticket toward the cost of your annual pass, and yes you can combine that with the DVC discount.
3. You can purchase new annual passes online, but you can only do upgrades in person at WDW.
4. You must do the upgrade at a Guest Relations or Ticket Sales window. These are located at any pack, including water parks, and at Downtown Disney. Hotel concierges cannot do any transactions dealing with annual passes.
5. To ensure you get the maximum amount for your upgrade for your original ticket, use it first. Yep, that's right. A ticket that's has been used can be worth more than a ticket that hasn't been used. If a ticket is not used, it is considered an exchange. It will be exchanged at the value you originally paid for it, if you purchased it directly from Disney. If you purchased it from a ticket broker, it's actually exchanged at the value the broker paid Disney for it -- which will be even less than what you paid. A ticket that has been used, on the other hand, is considered an upgrade instead of an exchange. You'll be given the full gate price on the day of the exchange toward your upgrade. So, use the ticket, enjoy the park for the day, then stop and upgrade the ticket to your annual passes on your way out that evening, when you're ready to hop to another park, or even the next morning. A ticket can be upgraded at any time within 14 days of its first use, even if all entitlements on the ticket have been used.
6. If you go back to do the upgrade on a day after the day you've used it, the annual pass will be back-dated to that first use.
7. To get the DVC discount, you must have your blue DVC membership card when you purchase the upgrade. Also, you must have a government-issued ID for every adult DVC AP you're buying. The address on every ID must match the address of the member. If anyone lives at a different address and does not have their own DVC membership card, they are not eligible for the discount.