You are correct in step one - you do get a methyl ester.
The second reaction is that of an ester in the presence of an excess of a Grignard reagent. Esters do not behave like aldehydes and ketones in the presence of Grignard reagents, but form tertiary alcohols.
So, after forming the methyl ester in step one, the two equivalents of the grignard will go on to remove the OCH3 and add on two of the alkyl groups attached to the MgX.
So, the answer is compound #1.
Hope this helps.