Dynamic ip refreshes every 24 hours or so so you actually get a new ip address regularly. Static, is Static. you always get the same one. i'd say static for gaming, although Xbox actually connects to the live service using mac addresses as identities, not IP's so there is little need to worry. (not your xbox live identity... your box's identity on their network!) If it's free, id say static, for future use. but get a decent firewall for your pc incase anyone with malicious intent realises your IP will always point to your computer.
Im not an Xbox gamer, but i know that in your router will be a setting called UPNP- universal plug and play. This needs to be activated for xbox. bum round your router config page til you find it.
you'll need your xbox's LAN IP for port forwarding. to port forward- Go into your router settings, and there will be a 'port forwarding' or 'applications' or 'gaming' tab. on here, on 2 seperate lines, choose range to and from as 88 - 88, on one line, and 3074 - 3074 on the next. enter your Xbox's Ip and check any 'enabled' checkboxes. these are the ports used by xbox. select 'UDP and TCP' settings, or if you can only choose one, use another 2 lines as follows - port 88 TCP, port 88 UDP, port 3074 - TCP, port 3074 - UDP. hope this helps a little.