I'm not familiar with the schools you're referencing, so you should take my comments with a grain of salt. a UGPA that low will be a problem if you're applying to a competitive program. there's no way around it really. one thing you could try and do is take a couple of classes between now and when you apply to increase your GPA. it's time consuming, but it could be worth the investment. the low GPA could be offset with a strong GMAT, but it'd need to be quite high to convince the adcom that you can handle the work.
with that said, i still think it's worth applying. the worst that could happen is you hear "no" and you're no worst off than where you are right now. you said yourself you have plenty of time to prepare, so why not take advantage of the MBA application process to focus your career goals, learn more thru GMAT prep, and think deeply about why you want this degree. from reading your post, i sense that you may be a little unfocused career-wise and may not know what you want to do professionally. it may snd weird, but the rigor and reflection required by the MBA application process may even help refine your thinking.
as it relates to discussing depression in your essays, i'd say that's up to you. i don't think it'd be a "red flag" or anything, as LONG AS YOU CAN position it as smthg that led to a positive. it's part of who you are and the journey you're on, so it's important. but make sure you don't sound like a victim when you mention what you went thru.
hope that's helpful,
Former Kellogg adcom member, offering a new approach to MBA Admissions Consulting.