I know this is an old question that was recently bumped, but for those people searching for a similar error to that of the original question, hopefully I can be of use.
From the warnings that you're getting while compiling your scripts, it seems like you aren't able to spawn because the game doesn't know PlayerController to spawn because you specified a class that doesn't exist.
The UDNPlayerController class doesn't exist with a clean installation of the UDK (at least not the August 2011 version) so you'll have to make it yourself. And since you specified it to be UTGame.UDNPlayerController, the UDNPlayerController.uc file must be in side the UTGame\classes folder.
Hope this helps you and whoever else may stumble upon this in the future.
On a side note, it's definitely advisable to start a separate code base so you don't have to recompile all of UTGame every single time you go to compile your scripts, you can find tutorials in the UDN documentation. Cheers!