The top action with the flag is the capture option. To capture nodes, you just need to select a node that you have access to and select an action. This is the Basic node, and just grants you access to adjacent nodes. If the system captures this node, it’s game over and you’ll have to start the hack over. This is the Blue node, and is your entry point into the hack. There are several different types of nodes, with slightly different effects.
The system will never lock you out permanently, so no worries there. It’s important to note that the attempts it shows you on the screen just refers to how many times you can disconnect from the hack before it locks you out for 30 seconds, similar to when the system catches you hacking before you complete the hack. If you have the skill level to hack the security system, it will show you a screen with the security level and how many attempts you have until it locks you out temporarily, or it will tell you that you don’t have the correct skill. For example, on PS3 you’ll press Triangle to hack, and on Xbox 360 you’ll press Y. If you are able to hack a security system, you just press the corresponding button to hack that is shown on the screen. For example, if you want to hack a level 5 security system, you’ll need Hacking: Capture level 5.
In order to hack anything with a rating of 2 or higher, you will need to upgrade your Hacking: Capture ability to match the level of the security system. Once you get to Sarif HQ, you will start with the ability to hack level 1 security systems. This is a complete guide to hacking, so check out my other article if you are just in need of some hacking tips for Deus Ex: Human Revolution.