I have just had sight of the actual book. So we can stop guessing!
This repeated section is NOT included in the DS. The Coda jump occurs before it starts.
So the intention is clearly to play the second strain of 'The Entertainer' at written pitch first time, 8va up the second time. This carries into the 2x bar, hence the need for 'loco'.
The whole arrangement is a confusing mishmash of 8va lines and text instructions. The instruction under discussion is particularly confusing, as '2nd X' is superfluous, and it's to say the least unhelpful that there's no confirmatory '8va up 2nd x' instruction at the beginning of the repeated section. The one and only time that 1st x bar is played, the pickup notes are to be played 8va up.
Hal Leonard should be ashamed of themselves.
Here's the page before the one the OP showed us. So now we're fully informed!
