Originally Posted by soup
Never had hub gears so no real idea however a quick google makes it appear this is a quite widespread problem so.
"It's simple to fix your 'slipping in second' problem. Put the handlebar selector in second gear. Now look closely at the indicator chain coming out of the rear hub (through the hole in the rh axle nut). You should see the tip of the fixed rod (where the chain joins) just appearing out the end of the axle.
Since it's slipping, you won't see the tip. Slacken off the gear cable at the rear hub until it just appears. Problem solved. And nothing is damaged (except your shin :-) ), the AW hub is amazingly robust.
PS There is a neutral gear between 2nd and 3rd with the AW hub. Your cable is pulling too tightly at present, so you are close to that 'neutral'. Cheers, AW_hub"