Led 2 flashing indicates the the computer is undergoing POST (testing components). If it flashing then something is wrong, usually the computer beeps a cumber of times which translates to a code eg ram error.
When led 2 is stable, the computer completed POST and is booting up through bios and then the OS.
Led 1 on which means the computer is receiving power.
See Manual: http://global.aopen.com/userdownload_List.aspx?RecNo=10062&Model=1258
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