Signal 1 is from telephone line...300Hz - 5000Hz,
That is a voice signal or the ring signal?
How do you plan to turn this in a 0-5V signal the Arduino can read? Phone lines produce pretty high voltages, 50-80V or so.
In what way does this have to be relayed? Exactly as is, or does the presence of a signal on that input have to produce a digital output signal?
What is this "signal2" supposed to be?
What is on the listening end of this "Signal1/Signal2" output?
Also, I want to ask this: If I set a pin of Arduino nano as OUTPUT, and I send 5 Volts to this pin from another circuit, could I cause any damage to the Arduino/pin?
Yes - that 5V is not the same as the Arduino's HIGH 5V output so the two voltages will fight each other. If the Arduino's output is set to LOW it's even worse. At the very least you should add a current limiting resistor (at least 250Ω to limit the current to a safe 20 mA, but depending on what you're really trying to do you may want to increase that value to 10k or more).
I'm assuming that these two circuits share grounds.
OK, enough of this dragging information out bit by bit. Why don't you just give the COMPLETE picture now?