Q1: I would expect P2 to have the value you mention.

Q2: The column is not 'detected' as it is controlled by the code. The variable 'col' has the current column number.This line takes into account the column and key pressed:

key=row_xlat[row]+col; /* get key code */

Q3: I assume you are referring to the line: P2|=0xf0;
Good question - at a quick glance I would think that the line should read P2 = 0xff;
Without looking at the complete piece of code, I cannot understand why Michael 'or's the column selects,I would have simply assigned the column select value to P2 with the lower nibble all '1's.