Make sure router #2 has its own DHCP server disabled!
Frankly, I'm amazed WDS is working at all. WDS is NOT a wifi standard, but proprietary, so incompatibilities are VERY common, esp. between different manufacturers. But sometimes you get lucky and they happen to share the same implementation. Even when it does work, you’re often forced to use WEP, or even no wireless security at all (ugg).
Yes, the DHCP server is disabled and yes, I am forced to use WEP. But that's fine. I am not transmitting any state secret here. And I try to change the password at least every 6 months.
Asus WL530g has no WDS with its original firmware. But there's a firmware upgrade which adds this function.