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The Mark II armor was designed and created by Tony Stark after his return from Afghanistan. It features much of the articulation and sleek-design which would appear in the final, Mark 3 armor. While testing the flight mechanism, he noted that 'icing' would become a major problem with the Mark II when upper altitudes were reached. It was hinted that Rhodey would be using the Mark II armor in the sequel.
The main focus of the Mark II was to update the armor with advanced construction and material with a focus to greatly enhancing it's flight capabilities. Stripping down the Mark I suit to it's basics, with the aid of modern resources and computer aided design, Stark was able to make the armor both much more streamlined while including massively more complex systems. Compared to to the electronically "dumb" Mark I, the Mark II featured a highly advanced compact computer system with extensive sensor systems linked to holographic heads-up display in the helmet, Stark's personal A.I. system J.A.R.V.I.S being able to interface with it and provide verbal warnings and system status updates. The outer surface of the armor was high gloss silver. The majority of the panels on the suit were articulated to serve as control surfaces in flight, but main flight stabilization cames from repulsors installed on the palms each hand.
The HUD multi-processor computer system was projected against the lenses that covered the eyeholes. Stark confirmed with Agent Coulson that the HUD included the J.A.R.V.I.S. monitoring capabilities and observational protocol, a Global Positioning System, target scanning, and displays for navigation, power level, and vital signs. One of the main goals of the Mark II armor was to provide flight stabilization to control the Thruster Boots. The strength of the Replsor Rays was apparently not initially weapons-grade in the Mark II. The Mark II was a protoype of the Iron Man Armors and had mainly systems for flight, thus its streamlined shape. It also has noteably no weapons on board like later models.
The Mark II armor was remade for the Hall of Armors and one version upgraded into the War Machine armor by Rhodey in Iron Man 2. After crashing Tony's Birthday party, Rhodey flies off with the Mark II Armor to the US Army and, collaborating with Justin Hammer, arms the Mark II with Hammer's weapons.