Please note: 5 year old thread.
Please post new questions in a new thread. Thanks

No idea about the SSIS.

Availability groups cannot be set up between different versions.

And please, test carefully before you upgrade production.

Just noticed the deadlock graph is Excel. I don't like downloading unknown spreadsheets, and Excel mangles the data as it is.
Can you attach either the deadlock graph (.xdl) or...

I haven't looked at the deadlock graph as I have a meeting in a couple minutes, but updates absolutely do take X locks.

The update will initially take U...

Short of asking people, no.

If you're going to switch to simple recovery, don't bother taking log backups first. Just switch to simple, and then shrink the log to a sensible size.

Just keep...

If the database is in full recovery (almost certainly) then the log gets retained until a log backup is taken. Not a full backup, not a differential, a log. This...

What's the data type of the State column?

Look at the queries, make sure they're efficient. Look at the indexes, make sure that they support the queries
If SQL's locking at the table level then either it can't...

No reasons. I recommend 2017.

Rather upgrade to SQL 2017, not 2016..
The work in testing and upgrading will be the same.

Compatibility is just for the query optimiser/query processor when executing query features that have changed across the versions. It's nothing more than that.