Does the 2nd gen have hardware de-interlacing? Don't know if I should enable it in the settings for the app or not?
No hardware deinterlacing is available. You can turn on the software deinterlacing setting but it may produce stuttering images due to the slow CPU.
I would recommend you pick up a 4K stick on sale.
So, I ordered a 4K stick. If I turn on software deinterlacing will it stutter or should I leave it off?
The 4K stick has hardware deinterlacing and works very well.