1 is just the locknut.
Slacken 1 off, and then adjust the screw 2 to get distance B at the lever - this will give you the same distance of freeplay / 'wiggle' at the gearbox arm - test it by waggling the arm - you should feel easy back and forth movement before it starts to operate the clutch.
Having confirmed that you've got freeplay at the operating arm, hold the screw "2" where it is and tighten the locknut "1" to lock the adjustment. This can be tricky as most of us don't have the special tool - I use a socket on a 'wobble' extension for the screw and an old bent ring spanner for the locknut.
