Option 1 with a few changes.
If you have to download something it will take some time. Because of this, it is a good practice to give some explanation to the user. So, it would be nice if you:
(1) Explain what is happening
I believe that it is enough to mention that you are downloading content, but if you think that it is relevant to mention what is specifically being downloaded, then do it. If you think it is too technical and not that important, don't do it.
(2) Give an ideia about how long it is gonna take
Is it possible to show some kind of progress? It would be perfect. The endless "loading" indication is frustrating.
I understood that you are downloading content immediately after the user logs in and, if that is the case, I think you should consider to log the user first and then to download what is needed. This way you show that the access worked fine, and a different thing is happening (your option 2 may give the ideia that logging in is taking too much time).