Option 1 states that in a federation, two sets of governments co-exist and there is a distribution of power. This statement is correct. In a federal system, there are two levels of government - the central or federal government and the state or provincial governments. These two levels of government co-exist and share powers and responsibilities. The power is divided between the central and state governments to ensure a balance and to prevent one level of government from dominating the other.

Option 2 states that there is a written constitution in a federal system. This statement is also correct. A written constitution is a fundamental document that outlines the powers and functions of the different levels of government, as well as the rights and responsibilities of the citizens. It serves as a legal framework for the functioning of the government and provides a basis for the distribution of powers between the central and state governments.

Therefore, both statements are correct and the correct answer is option 3 - Both 1 and 2.