This is an interesting question which has two aspects that I would like to address
- You awarded your old PI an authorship when it was not deserved.
While I understand your reasons for doing this, you should avoid doing this in the future.
Instead you should always have a meeting with your coworkers where you discuss who should be first author, second author, etc. and who should contribute what.
Ideally, the ordering of the authors should be settled well before first draft appears. If someone make a smaller or larger contribution than expected, then the ordering can be renegotiated.
This is though to pull off especially when the distribution of power is uneven, but try to take the lead: "I have this idea which I would like to develop into a paper. I think you are ideally suited to complete this important task. Do you have the time to make this contribution to a joint paper during the next two months?"
- It appears that you neglected to invite your old PI to contribute to the extended paper.
Again, while I can understand your reasons for doing this, a third party might view things differently.
It is possible to argue that you have tried to deny your old PI credit for your past work.
This is less of an issue if the new paper not only cites the old paper but make a new and very significant contribution.
Moreover, if your old PI has declined to collaborate citing, say, time constraints, then this issue evaporates completely.
Now in your current position I would cite the old paper and ensure that the new paper makes a new and very substantial contribution. I would only award authorship according to the criteria suggested by the ICMJE:
"Substantial contributions to the conception or design of the work; or the acquisition, analysis, or interpretation of data for the work; AND Drafting the work or revising it critically for important intellectual content; AND Final approval of the version to be published; AND Agreement to be accountable for all aspects of the work in ensuring that questions related to the accuracy or integrity of any part of the work are appropriately investigated and resolved.
All those designated as authors should meet all four criteria for authorship, and all who meet the four criteria should be identified as authors. Those who do not meet all four criteria should be acknowledged."
Visit the ICMJE website for additional information.