codeblock = """def Reclass(PA,dist):
                    if PA=="M" and dist==1:
                        return "MM"
                    elif PA=="M" and dist==0:
                         return "MW""""

arcpy.CalculateField_management(fc, field="NEW", expression="Reclass(!Field1!,!Field2!)", expression_type="PYTHON_9.3", code_block=codeblock)