You don't need to run static IP's to port forward, but its smart to do so. Because what if another device on your network pulls that IP while your Xbox is powered down?
I run everyone on my network statically, Its just better for network managing.
If it does not display TCP or UDP it probably forwards both protocols. Difference? TCP is used generally for file transfers, Tranmission Control Protocol. If you used TCP for phone calls, video, streaming music, you would get a lot of delay. Because every packet you recieve, your sending a confirmation packet back to the remote location, telling it "I got this packet, Send the next one". Its a much more legit way of doing things, for things that are do - or - die if you have all the packets or not.
But UDP on the other hand, its ehhh.. Fire and forget? Best way to explain it. The remote location is shoving an *** load of packets towards you, if you don't get a packet, it doesn't care, because if the packet drops, whats the point in getting it again? The moment is done and over with. Thats the best explanation I have for it.
So when your playing lets say, Halo 3. When your searching for a game blah blah blah, its all ran through TCP, but as soon as you get into game, its UDP.
Same as a phone call. (VOIP that is) You pick up a phone and start dialing, your talking to the switch/router/call manager using TCP protocol, as soon as that other person picks up, it is now UDP.
Cheers. I know you didn't ask about transfer protocols and what they do. But eh'. There it is.