You are on the right track.

There are two things to keep in mind.  Rules fire based on the field with
the rule changing.  So if you want to populate field2 when field1 contains
something specific, set the rule on field1.

The second is that the Condition Builder that is part of the "Set a field's
value" is just an XPath builder.  So any XPath will work.  Quotes are used
for literal strings.  Further, literal strings can just be typed into the
text well without having to go into the condition builder.

If this still isn't what you are looking for, you may need to provide a more
detailed explanation of your scenario.

In it's simplest form, with Rules in your scenario as i understand it, you
can type "foo bar" in field1 and field2 will be populated with some text
because "foo" is contained in field1.

--josh bertsch