How do I set up a layer 2 link across the SFP interface?

SwOS
1

260GS
OS rev 1.10

I am trying to set up a layer 2 link across a pair of 260GS switches connected by an SFP link. The fiber link is fine but there doesn’t seem to be any ARP from the remote 260GS. In the diagram below all units are in the 10.49.5.0/24 network. 10.49.5.1 can ping 10.49.5.2 but not 10.49.5.3 nor any devices attached to it.
switches.png
Units attached to 10.49.5.3 can ping 10.49.5.2 but NOT 10.49.5.1. The link is clearly not layer 2 clean, DHCP from the RB750 can’t reach units attached to the far switch.

The switches are box stock except for the assignment of IP addresses.

How do I make this link layer 2 clean?

JT