I disagree. When they say "true first round pick" they mean the one your team naturally gets. Say, for example, OP's first pick was #8 in the draft. That pick would qualify for Type D since it's his own true first round pick. OP got the #20 pick from type A compensation, so it's not his team's true first round pick, so he's not eligible to get type D from that pick's failure to sign. Whether it's the original team's true first rounder doesn't matter since it's no longer that team's pick.
To answer the remaining questions, if you have a pick that qualifies for Type D and you make an offer that meets his original demands, and you never withdraw that qualifying offer, then you'll get Type D no matter what else happens. You don't have to chase the escalating demand(s).
12/30/2020 10:45 AM (edited)