 Solution

The two-involution characterization of a dihedral group uses the extended convention that includes $C_2$ and the infinite dihedral group; the two generators need not be distinct. Put $a=xy$ and $b=y$. The inversion relation givesIf $a\ne e$, both $a,b$ are involutions and generate the original group. If $a=e$, then $x=y$ and the group is $C_2$; choose the same nonidentity element twice. Thus two elements of order two generate the group, including the degenerate case allowed here. The distinction between square equal to the identity and order of a group element exactly two is essential.