Problem: Grid EXPAND() function does not expand as expected with zone value of zero
If there is no value of zero in a grid, and zero is specified as a selected zone along with another valid value, the EXPAND() function output will be identical to the input.
The expand function would be expected to operate on the other listed selected zone(s).
This is a known issue with ArcGIS 8.1.
Solution or Workaround
Don't identify zone values that don't exist in the input grid.