Repeat a section that has first and second endings

Nested repeats are a big musical no-no - they do nothing but cause confusion both to MsueScore and to the human musicians reading the score (wasted another ten minutes of rehearsal last night dealing the fallout of an arranger not heeding this rule). If you want to optimize for compactness here, use a DC, not another repeat, and explicitly say "play repeats" on that DC. But do consider also, unless it is the difference between two and three, or three and four pages (and thus affects whether it can work as facing pages when bound, or whether it can fit on the music stand or not), it isn't always wise to optimize for space, either, as any jumping around can cause some disorientation and lead to errors.

Keep in mind what Mark says, these are important recommendations.

But this particular example seems a little innocent.
So, let me tell you how:

1 for the first volta: set the "repeat list" to 1,3 in the Inspector *1
2. for the second volta: set the "repeat list" to 2,4 in the Inspector *1
3. Go to the measure that contains the first end-repeat-bar inside the first volta (measure 8), right-click on the measure, select "measure properties", and set the play-count to 3.

corrected file is attached.

*1: Also change the "Begin text" areas to "1. 3." and "2. 4." as Human players will understand.