What type of antenna does the Xbox One controller use and how can you disable it?
Next I thought that cutting the trace on the bottom side of the board leading to the antenna (shown in red) would surely do the trick but again I was wrong; it would still connect if I was within a foot or two of the Xbox One. As an aside, what exactly is that trace's functionality? 


The red line you cut IS the antenna path. But not it's radiation source. The reason it now only connects at 1 foot instead of its usual range is because you crippled it. Two ways to completely (for practical purposes) remove the signal is depower the entire antenna/wifi section, which the sub-board is, or connect the antenna trace to ground.

For theory, Antennas should be a full or 3/4th or 1/2, or 1/4th of the wavelength for optimum propagation. Just because it is not that size does not stop it from working, it just stops it from working well. Your antenna is now a few millimeters long instead of a few inches.