Oh, sorry Fabe, missed the ps at the end.
To create second level entries you should highlight the point in the book (Subchapter or whatever) and select "H2" from the small drop down at the top left of sigil screen. When you go back into generate TOC it will show as second level to the previous "H1". Although, if you regenerate your TOC you will lose any edits you made to the ncx file. i.e. Changing "Chapter One" to "Chapter 1: It was Just The Beginning". You will need to manually re-enter this change. A pain, but only 5-10 mins work, IF you have actually changed or want to change the TOC entries.
Clear as mud?
