Yes you are correct, 1st timer indeed have 2 chances over 2nd timer, if they manage to get a queue number, but fail to choose for twice, they will be place as 2nd timer for 1 year. Priority scheme does not guarantee you a good queue no., only guarantee you a slot within the 300% balloting, the computer then will generate queue no. for all the applicants who is inside the ballot
When you say fail to choose twice, do you mean within a span of one year or the entire lifetime?