I've got no access to a site running that checkout processing. Given that UPS-XML runs fine under zc157 and zc157 under OPC and the standard 3-page checkout, I'll suggest that you start looking in Numinix's code for the source of the issue.
For whatever reason, the $order class' delivery section is malformed when presented to UPS-XML; the order's delivery['country']['id'] is not set/null when the shipping method is invoked.
$state = zen_get_zone_code($order->delivery['country']['id'], (int)$order->delivery['zone_id'], '');



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