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You are correct, part II doesn't apply to you - that's for educational accounts
You are not exempt from the 10% early withdrawal penalty - hardship withdrawals are still subject to the penalty unless they are one of the exceptions listed in the instructions to the form.
So you will enter the amount of your withdrawal on line 1 and line 3, then multiply that by .10 to get your additional tax.
Then all that's left to do is sign the form and send it off to the IRS.
I'm truly sorry about your misinformation. There is a proposal out there to waive the penalty in your particular situation, but unfortunately it has not been enacted yet.
Your banker was incorrect in the information they gave you. I'm very sorry.
Please let me know if you need any additional assistance
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