In Part 1 (Kim & Yue 1989), we considered the second-order diffraction of a plane monochromatic incident wave by an axisymmetric body. A ring-source integral equation method in conjunction with a novel analytic free-surface integration in the entire local-wave-free domain was developed. To generalize the second-order theory to irregular waves, say described by a continuous spectrum, we consider in this paper the general second-order wavebody interactions in the presence of bichromatic incident waves and the resulting sum- and difference-frequency problems. For completeness, we also include the radiation problem and second-order motions of freely floating or elastically moored bodies. As in Part 1, the second-order sum- and difference-frequency potentials are obtained explicitly, revealing a number of interesting local behaviours of the second-order pressure. For illustration, the quadratic transfer functions (QTF's) for the sum- and difference-frequency wave excitation and body response obtained from the present complete theory are compared to those of existing approximation methods for a number of simple geometries. It is found that contributions from the second-order potentials, typically neglected, can dominate the total load in many cases.