1- Is this only available via text commands?
Yep...for now. They might be reworking the configurations menu at future patches tho.
2- What is the difference between Target mode A and Target mode C?
Target mode C is locked into "All" target mode. Basically the C is the one the game started. the A can change modes by holding autorun and pressing the respective mode button you want (confirm for enemy, cancel for party, menu for friendly and emote for all)
3- Is there a way to have the up and down button cycle through part members and the left and right buttons cycle through NPCs?
Enemy mode works this way. You target only mobs with left/right and only party members with up/down. If you want mobs and NPCs at left/right, then nop, you can't right now.
4- I have no idea what direct targeting is, can someone please explain what is this used for?
Direct target is that, if you have no one targeted and no valid target on screen, when you press confirm button it will target the closest target availble, even if its not a valid target for the current mode you're on. Best is to just leave this off unless you're already used with the old targeting system.