is the "of" clause used correctly in the 2nd sentence? If so, what is the difference between the 1st and 2nd.
she is pretty
she is of pretty
Of is a preposition and requires a noun or nominal as its object: of NOUN.
To express She is ADJECTIVE with an of phrase, you have to convert ADJECTIVE into the NOUN which names its quality. Old, for instance, would become age, beautiful would become beauty, and so forth. It is then grammatical to use of QUALITY as a complement of BE—MdMazzotti gives you a few examples—but the construction is literary and I think unproductive in spoken English. Even in written English of QUALITY is far more often found modifying a noun rather than as a predicate nominative:
ok She is a woman of beauty, BUT
? She is of beauty.
Moreover, there are not many adjectives which will survive this conversion. Pretty, for instance, would have to become prettiness, and this will not work at all:
∗ She is of prettiness.
A slightly more common construction is BE a NOUN of ADJECTIVE QUALITY:
She is a woman of great beauty.
Parkinson was a scholar of undoubted probity.
Lord Darrowby was a blackguard of a vicious and unrestrainable temper.
My advice to you is that you avoid constructions of these sorts altogether, until you are widely read in English literature of the past century or so and have an intuitive understanding of when they can and cannot be employed. Unless you become a novelist or literary critic it is unlikely you will ever need them.
You can use "to be of" in a sentence like this:
You are of a rare beauty.
The dog is of a breed that is predisposed to aggressive behaviour.
I am of the idea that...