Yes, 1 indicates the first pin on the slot or the red wire on a IDE cable.
Yes, you have the option to use either a 2.5 inch drive on the second 2.5 slot OR a 3.5 inch drive.
First slot is 3.5 inch only.
You might be strapped down by the "low" transfer speeds of the A1200 onboard IDE controller, so dont expect the wild thing

Nice little board, tho.