Solution:
First we show that RSTU is always inscriptible. Note that in addition to ABCD, we have cyclic quadrilaterals ARPU and BSPR. Thus,
∠PRU=∠PAU=∠CAD=∠CBD=∠SBP=∠SRP
and it follows that P lies on the bisector of ∠SRU. Analogously, P lies on the bisectors of ∠TSR and ∠UTS, so is equidistant from lines UR, RS, ST, and TU, and RSTU is inscriptible having incenter P.
Now we show that RSTU is cyclic if and only if the diagonals of ABCD are orthogonal. We have
∠APB=π−∠BAP−∠PBA=π−∠RAP−∠PBR=π−∠RUP−∠PSR=π−21(∠RUT+∠TSR)
It follows that ∠APB=2π if and only if ∠RUT+∠TSR=π, as desired.