The one on the bottom of the crank case is a crank case vent, leave it open. Hook up the muffler pressure as normal, to the muffler. If it doesn't have a fitting on the muffler, or a muffler, leave it open.
I have a magnum FS, and I'm not sure of the "second nipple" you are talking about. There is one on the carb (fuel in) one on the bottom of the case (vent for crank case) and one on the muffler, (pressure). What is the other one you're talking about? Pictures?