Quote from Kaitentsuki
I don't think Urahara ever was in the Zero Division, but i had all but forgotten about that spring and actually liked that he included that minor detail.
He probably wasn't in the zero division but he has definitely been up in the palace. In chapter 421, it's implied that both Aizen and Urahara have laid eyes on the Spirit King. He never comes down, so they must have gone up for one reason or another. Maybe Isshin took them up (thereby ruining the Shiba clan's reputation)...
Quote from nert5
They mention that each of the plates they rule have cities so maybe Urahara is from one of those plates. Also they may be where people that die in the soul society go.
Interesting theory. I have a counter-theory. Soul Society itself might be one of the plates. It was mentioned earlier that the only one who knew the location of the key was Yamamoto. It would make at least some sense that Yamamoto would be the "sixth" of the zero squad. I don't expect either to pan out, but it's fun to think about it.