Weird VertexTexCoords behaviour?

I might have this completely wrong, but I'm just starting to experiment with 2 UV coordinate sets.

Here's what I want to do: Create a square with a smaller square in its center. Texture the whole square with some texture (Woodfloor), then blend a second texture (Light) only in the smaller square.

Here's my code:

Graphics3D 640,480,16,2

Camera = CreateCamera()
PositionEntity Camera,0,1,-5
AmbientLight 255,255,255

tex=LoadTexture("woodfloor1.jpg")
tex2=LoadTexture("light.jpg")

TextureCoords tex2,1

LevelMesh=CreateMesh()

Surface1=CreateSurface(LevelMesh)
AddVertex (Surface1,-1,1,0,0,0)
AddVertex (Surface1,1,1,0,1,0)
AddVertex (Surface1,-1,-1,0,0,1)
AddVertex (Surface1,1,-1,0,1,1)
VertexTexCoords Surface1,0,0,0,0,0
VertexTexCoords Surface1,1,1,0,0,0
VertexTexCoords Surface1,2,0,1,0,0
VertexTexCoords Surface1,3,1,1,0,0

AddTriangle (Surface1,0,1,2)
AddTriangle (Surface1,1,3,2)

AddVertex (Surface1,-.5,.5,0,0,0)
AddVertex (Surface1,.5,.5,0,1,0)
AddVertex (Surface1,-.5,-.5,0,0,1)
AddVertex (Surface1,.5,-.5,0,1,1)
VertexTexCoords Surface1,4,0,0,0,1
VertexTexCoords Surface1,5,1,0,0,1
VertexTexCoords Surface1,6,0,1,0,1
VertexTexCoords Surface1,7,1,1,0,1

AddTriangle (Surface1,4,5,6)
AddTriangle (Surface1,5,7,6)

EntityTexture LevelMesh,tex,0,0
EntityTexture LevelMesh,tex2,0,1

UpdateNormals LevelMesh

Repeat
	UpdateWorld()
	RenderWorld()
	
	Flip
	
Until KeyDown(1)

Now, two things happen that I don't understand:

1) Instead of the desired result, the two textures are blended together and then applied to both the larger and the smaller square (i.e. the smaller square is a carbon copy of the larger square)- how do I get the desired result?

2) If in the second set of AddVertex's (for the smaller square) I remove the U,V values at the end, I get a completely different result - why would this even affect my result?

Any thoughts?

Thanks in advance,
Patrick