Hotwork,
Look for the little note at the bottom of the Groove Preparation column for this joint detail. It says S2 = T1 - (S1 + f). So S2 = 3.5" - (1.625 + 0.25). Note that 0.25" is the minimum allowed "f" dimension, and therefore S1 is 1.625". Therefore your answer is 1.625" as the formula will be 1.625" = 3.5" - (1.625" + 0.25").
Mankenberg