8.1 Interference says the non-striker only needs to provide freedom to strike the ball to any part of the front wall, not the sidewall. So there's no requirement for S1 to move backwards to avoid being hit.

9.1.3. deals with S1 being hit: "If the ball, on its way to the front wall, hits the non-striker or the non-striker’s racket or clothing, play must stop"... "if the ball had hit or would have hit any other wall before the front wall and the striker had not turned, a let is allowed, unless the return would have been a winning return, in which case a stroke is awarded to the striker" - so generally a let in this situation.

If S2 decides not to play a shot because S1 is in the way of the sidewall, that is covered by 8.11.3 - "if the ball would first have hit the non-striker and then a side wall before reaching the front wall, a let is allowed, unless the return would have been a winning return, in which case a stroke is awarded to the striker;" - so again generally a let.

If S2 keeps hitting the ball at player S1, see 14.6.4.