Setting up ARC using MOTU Ultralite

Bit of beginner in the room treatment game... so really would appreciate help with this guys...
 
 
What settings should I set my MOTU ultralite mk3 to use with ARC (verison 1)?
 
I've turned on +48B phantom for the mic - plugged in mic to front XLR setting
Set samplerate to 48khz..
 
1) What setting do I set PAD on????
 
2) On the leaflet it states   direct hardware monitoring off ---- how do I do that???   ( is that the monitor level trim know (currently set to stereo?)
 
All help appreciated!