make sure to write the right algorithm
you need to make sure you typed if ,else syntax correctly and don't forget there's only one initial condition
at first you want LED 1 on and when the sensor is one LED 1 off and LED 2 blinks
all of the pins should be connected on on the pwm analog pins because you have different out resolution
the first time to read this title I was astonished but Ifigured out that this task is very simple when dealingwith arduino you to know that there should be input , something to process and output ,
input and output could be digital or analogue , potentiometer input signal is analogue so we have to use analogread for potentiometer pin.