I have a basic question on reefing with my present system set-up.
1. Is the red line path correct or should I tie off to the sliding eye?
2. My clew line is rope to wire.
A. Is the wire necessary?
B. Is there a block inside the boom ? I am unable to see inside the boom since the sheaves are riveted to the end and so are clutches at other end of boom.
3. If the above is correct where would my 2nd reef lines run ?
Your setup looks wrong. I can't guess what the cleat you mention is for, perhaps a topping lift...a picture would help...but it wouldn't seem to be needed for reefing.
You should read this thread Reefing, Spiral Lacing vs single line and how to tell what you've got?
and set up your lines accordingly. I would expect that the sliding eye serves only to keep the reefing line in a certain position on the boom, the reefing line should be tied back to itself via a bowline, see my post in the above thread.
A rope-to-wire outhaul is not really necessary but it was a common approach.
As to whether there is tackle in the boom for the reefing line, probably not, especially if you are able to run the working end back to a winch which would provide any needed force. You can determine whether there is a block involved by seeing if trimming the reefing line x inches moves the end of the line by x inches... if the distance moved is the same, there are no blocks involved in the boom.
You install the second reef line just like the first, except it ties around the boom below the location of the second reef cringle in the leech.