It's both. Start with finding a way to get return air from the upper level down to the furnace. Insulation never hurts... but that's secondary.
you make a bloody mess opening up walls and floors for the duct to run.
Not likely. Depends on duct sizes.
Get a pro in there.
Tell them to pretend you have no drywall installed or sheet metal in place.
Use the prescription that provides as a guide.
hth