I’m dense and don’t know exactly what you mean. To me “system” means a collection of S1 players or a collection of S2 players. And I don’t know if you are attempting to add players to a system or build a new system. Or if you are downgrading one or more S2 players to S1.

I recommend that you refrain from Factory Reset without further consult.

Do you need to preserve any music service registrations or Playlists?

I am equally dense. I haven't a clue what the problem is. Please explain what you are trying to do, what is going wrong and what messages you get. 

Let me try.  Just searched for this exact topic.  I have a Sonos move.  Used it at another house with S2.  Followed downgrade process ( which I have done before on a sonos1).  The s2 app with the downgrade option wizard won’t downgrade.  Get past the log in and everything and starts over.   Over and over.    Yes move is green flashing - which I think is reset. 

So of course after I write this, I got my Move to downgrade.  
 

1. prayed, cursed, and considered  throwing  Move as I carried it by handle. It is a mobile device. I wondered how ruggedized. Has a nice throw weight…
2. reset S2 app on phone. It had connected to my Sonos system.  And I think that was the problem
3. move was on battery and completely died.  I put it in charger ring and it rebooted.  Complete Reboots are sometimes magical, could have also been a problem 
4. then started s2 app and ignored the constant pop ups to join my Sonos system. It does say in docs to avoid this, but hard to.   
5. Clicked settings to select downgrade option. Rather than “more options” in connection wizard.  
    
6. Worked 
    

At this point it is possible that the controllers are in a bad state. Since the controllers don’t save anything important, there is no major harm uninstalling one or both controllers and installing a fresh copy. Take care with the fresh install -- you want to control an existing SONOS system -- do not accidentally start up a fresh system. In my opinion it is too easy to click on the wrong option at this critical point. Keep the problem child MOVE powered down as you install new controllers.

Since we don’t know the exact state of the MOVE (S1/S2/limbo), I recommend another Factory Reset for MOVE (only MOVE). Power down all of the S1 units and it would be prudent to shut down the S1 controller too. Now attempt to downgrade the MOVE. Possibly it has already been successfully downgraded and the downgrade process will point this out. I’ve never actually attempted to downgrade an already downgraded unit. In any case, we now have an S1 MOVE.

Power down the S2 units and add the MOVE to your S1 system.

As you have noticed by now, I’m a slow typer.

Yes, there is a strong push toward upgrades, rather than simply reassigning a MOVE to an S1 system. If you ever decide to transfer the MOVE to the S2 system I recommend starting with a Factory Reset of the MOVE.