How should I set it up so that P0 is configured as outputs. P1, P2,P3, P4, P5, P6 and P7 are configured as inputs.
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Default values for the p-port pins are set to inputs. To change just P0 to an output, we would need to change the contents of the configuration register.
Configuration register is located at address 0x03. To change P0 (C0), write b11111110 to the configuration register.
Note the default values in the output port register:
Output port register is default 0xFF. So as soon as the ACK is generated from the IO expander from the previous command sent b11111110, P0 will immediately drive to VCC.