My take on the text:
Case 1: I say select Flap 5, since it is the smallest "ACTUAL" flap position. While 2 is a smaller setting, it's not "ACTUALLY" at that setting.
Case 2: While neither flap is at 1, I would say reselect 1 since both are closest to that setting. It's also the smallest setting you can select with both beyond Flap 1.
Since the text stipulates "Move flap lever to the detent nearest the smallest actual flap position" I say reselect the lowest flap setting that one pointer is actually at (or very close to...). "Actual flap position" is open to interpretation, I think, but that's how I read it.
My $.02...