Phase 1 establishes a secure connection, so the random key for phase 2 can be passed. This secure connection is either based on the pre-shared key or a cert. The algorithms you choose are just to determine how to negotiate the session.

Phase 2 uses the secure key created and passed in phase one to create the tunnel to pass data.

You can specify a different encryption algorythm for your key exchange and data exchange.

IPsec, can be pretty daunting to get into. There is a lot of doc's out there both on the web and on cisco's site. I'd recommend doing some research. I've found the learning curve to be steep.