Thanks to you now it works as expected... but you may not guess why :))

First I tried both ways; P3.6&7 to Gnd then to Vcc but nothing new happened; P0 was always 0FFH.

At the same time, I was sure that it worked for you. By a closer look at your test photo the missing hole at last showed up (not mentioned in AT89S51 datasheet!)

Pin 2.4 HAS to be 'LOW'. I wonder how you get the idea to make it that way and not keep it unconnected since according to Atmel it doesn't have any role!

The new question arises now:
Does the level at P2.4 affect other parallel modes or not?!!!

Thank you again Ijaz :)

Kerim