Yes the blank bay is where second drive will be. Normally try to put master above the slave drive as it will make the connecting of the ribbon much easier in the following steps.
To set the master\slave settings, on the back of each drive there will be a jumper. These can be white, yellow, or black. Also there will be a diagram of some sort on the back or the top\bottom of drive telling which jumper setting is for master and which is for slave.
Just place the jumper for each drive on the correct setting. One will be set for master and the other for slave.
When you connect the ribbon to them the master has to be at the end of the ribbon and the slave will be on the center connector. the other end will go to the motherboard. They are keyed so that the connector will only fit one way on mb and on the drives.
For future reference the red striped side of the ribbon will always be closest to the power connector on the drives.
I hope this answers your questions clearly. If not please ask and I will explain.