How do SEF urls work with SH404sef?

I have sh404 installed. When I create a product, I get an URL like this (page currently unpublished since my site is live)
www.nucleus-soundlab.com/Test/1/Itemid-228.html

'Test' is the menu item name. I have no idea what 1 signifies. Product category doesn't seem to be anywhere in there, neither does product name.

The URL I want is pretty simple - www.nucleus-soundlab.com/product_category/product_name.html . Is that possible?

There is no option to do what you want. If you know PHP, you can edit the file components/com_hikashop/sef_ext.php to make it do that. However it's not just two or three lines of code to change.

You can also use the URL alias system of sh404sef to tell him manually to convert the URLs.