You should never use Case-sensitive. Both HD1 and HD2 are formatted Case-sensitive, and therein is the problem.
I noticed in Disk Utility that there are two devices listed as WD My Passport and both have volumes named HD2. However, the first entry's volume is ghosted (unmounted) but the second one looks mounted and OK.
Did you specifically format HD1 Case-sensitive? HD2 is the source drive and is formatted Case-sensitive. Disk Utility may not be able to clone a case-sensitive drive or won't clone one unless the destination drive has been formatted Case-sensitive. This is out of my area of experience as I have never tried using Case-sensitive because it was never suggested by Apple.
If you can't make further progress with this, then I suggest you try using Carbon Copy Cloner to clone the drive because CCC does a basic file-by-file clone whereas Disk Utility is a bit-cloner. CCC is an outstanding utility. I only use Disk Utility for partitioning and formatting drives. I use CCC for all other file copy needs.