My landlord wants me to pay a second security deposit, saying that it is an annual payment of 1 months rent extra, as opposed to a one time payment. In effect he will have in his possession $800 dollars of security deposit if I make this payment. He says he will refund the first one a few months later, but for a time in between he will have TWO security deposits from me. He is unwilling to just keep the security deposit already given to him.

Very strange. Where is this? Is interest required on security deposits in your state? (Maybe he's trying to get around that, not that it would be very much, but he may not have put it in a bank escrow as required in some states.)
I would say that you 'don't feel comfortable about it,' while you check on it, and also would ask for an explanation. It can get expensive being on the wrong side of a landlord who raises the rent in retaliation, but you shouldn't be walked all over either.

I'm in Pennsylvania. The landlord has already dropped a case trying to evict us based on terms that are in his lease, but by law not allowed in the lease. He stopped pursuing as soon as we showed him we knew what we were talking about.

I would noy go along with this at all. Money is money so if he is planning to return your deposit after he gets your new deposit he has something up his sleeve like maybe a totally newly worded lease