The match came to life in the 35th minute when Milan's Hakan Calhanoglu struck a superb 30-yard goal, finding a gap in Arsenal's shaky defence and throwing the Italians a lifeline.
"It's a definite dive", former Arsenal defender Martin Keown told BT Sport, while ex-Tottenham star Jermaine Jenas said: "Welbeck doesn't feel any contact apart from his own feet connecting with themselves and he goes over".
The Gunners extended their advantage on 71 minutes when the highly-rated Donnarumma made a complete hash of a long-range Xhaka shot, with the ball squirming over line.
The problem is that it will take the gloss of Arsenal's win and, even though they are into the quarter finals, former players, pundits and TV experts were queuing up to condemn it. Gary Lineker called it a "blatant dive", Jermaine Jens called it "cheating" and Alan Shearer insisted the referee was "conned".
"Every game he plays makes him stronger and that is very good for Danny, for his confidence, for the fact that he did fight very hard", added the Frenchman.
Earlier on Thursday, Fernando Torres scored twice as Atletico Madrid romped to a 5-1 Europa League thrashing of Lokomotiv Moscow in Russian Federation to complete a resounding victory. "When the time is right me and the boss will sit down and have a conversation and see where we go from there". I don't know. After, Danny took the penalty in a convincing way. The third goal really upset me.
"It's always hard to finish the job, especially when you have a good away result because you don't know a little bit (what's going to happen) in between", Wenger said.
"We were in protective mode, subconsciously, and played a little bit with the handbrake from the start".
What do you think of the draw and will you be going?
Arsenal supporters had stayed away from the Watford game in their droves in protest at Wenger, prompting the manager to admit he was anxious about how they would win back the absentees.
"We will see", Wilshere replied when asked if he will be staying beyond the current campaign.
The likes of Atletico Madrid, Lazio, Sporting Lisbon and CSKA Moscow now await in Friday's quarter-final draw, with Wenger naming Atletico as favourites for the trophy.