According to Sam Amico of NBA.com, the Denver Nuggets will only trade Melo to the Kings, Nets or Wolves.

I personally love this little rumor out of a source I am not too fond of. To me, this means Denver is targeting young talent in return for Melo ie. Favors, Tyreke Evans, Kevin Love and or Wes Johnson. As a Nuggets fan, I would be fine with any deal to any of the three teams listed (even Minny and even though they are in the same conference as the Nuggets). The three deals I could see Denver pursuing are as followed (Note these are my own scenarios, not rumored deals):

Denver sends Melo and JR Smith to Minnesota for Kevin Love, Wes Johnson and 2 second round picks. This may seem a bit far fetched and unlikely, however Minnesota could then look to move Johny Flynn for draft picks and then pursue Tony Parker as well as David West next year in free agency with all the money saved up. Minnesota also gets a young shooting guard with a one year chance to prove himself. If he does it could go from a good trade to a great trade for Minny. Denver gets Love to start at PF and Wes Johnson to replace Melo at the 3. I personally think Wes will be the next Rudy Gay type 3 player to play in this league.

Denver sends Melo and Chauncey Billups to Sacramento for Tyreke Evans, Sam Dalembert and Francisco Garcia. Again, may seem far fetched but this would make Sacramento an immediate contender and the process of developing Demarcus Cousins may be much smoother with Melo and Billups on the team. If Sacramento refused to part with Evans then sub him out with Cousins for the same deal.

Denver sends Melo to New Jersey for Favors, Devin Harris and Troy Murphy. This deal has already been discussed numerous times so I won't go into detail.

Now, before Net, King and Wolves fans come on here and bash the hell out of my scenarios, understand that Denver is in full control of the Melo front and will gladly let him walk to New York for cap relief if they can't pull the trigger on a deal. This will become a bidding war and may be the only chance that these teams have at grabbing Melo besides maybe the Nets. Keep that in mind before you post. Thanks guys!