You must choose the second option.
Update item to version
Update the working copy to the selected revision. Useful if you want your working copy to reflect time in the past, or if further commits have been made in the repository and you want to update your working copy one step at a time. it is best to update the entire directory in your working copy, and not just one file, otherwise your working copy may be inconsistent.
If you want to undo an earlier change forever, use Revert instead.
Go to this version
Revert to an earlier version. If you have made several changes, and then decided that you really want to return as everything was in the N edition, you need this command. the changes are canceled in your working copy, so this operation does not affect the repository until you commit the changes. Please note that this will undo all changes made after the selected revision, replacing the file / folder with an earlier version.
If your working copy is in an unmodified state, after completing this, the action of your working copy will be displayed as changed. If you already have local changes, this command will merge the undo changes into your working copy.
What happens inside is that Subversion performs a reverse merge of all changes made after the selected revision, undoing the effect of these previous commits.
If, after performing this step, you decide that you want to cancel, cancel and restore the working copy to the previous unmodified state, you should use TortoiseSVN → Revert from within Windows Explorer, which will undo the local modifications made by this reverse merge action.
If you just want to see what a file or folder looks like on an earlier version, use Update to revision or Save revision as ... instead.
Discard changes in this version
Discard the changes from which the selected revision was made. Changes will be undone in your working copy, so this operation does not affect the repository at all! Please note that this cancels changes made only to this revision; it does not replace your working copy with the whole file with an earlier version. This is very useful for undoing an earlier change when other unrelated changes have occurred since then.
If your working copy is in an unmodified state, after completing this, the action of your working copy will be displayed as changed. If you already have local changes, this command will merge the undo changes into your working copy.
What happens inside is that Subversion performs a reverse merge of one revision, undoing its effect from the previous commit.
You can cancel the cancellation as described above in the "Return to this revision" section.