  We present HST/WFPC2 observations of a well-defined sample of 40 X-ray
sources with X-ray fluxes above the detection threshold of the full 1 Msec
Chandra Deep Field South (CDFS). The sensitivity and spatial resolution of our
HST observations are sufficient to detect the optical counterparts of 37 of the
X-ray sources, yielding information on their morphologies and environments. In
this paper we extend the results obtained in our previous study on the 300 ks
CDFS X-ray data (Schreier et al. 2001, Paper I). Specifically, we show that the
optical counterparts to the X-ray sources are divided into two distinct
populations: 1) an optically faint group with relatively blue colors, similar
to the faint blue field galaxy population, and 2) an optically brighter group,
including resolved galaxies with average colors significantly redder than the
corresponding bright field galaxy population. The brighter objects comprise a
wide range of types, including early and late type galaxies, starbursts, and
AGN. By contrast, we show that the faint blue X-ray population are most
consistent with being predominantly Type 2 AGN of low to moderate luminosity,
located at higher redshifts (z ~ 1 - 2). This conclusion is supported by
luminosity function models of the various classes of objects. Hence, the
combination of deep X-ray data with the high spatial resolution of HST are for
the first time allowing us to probe the faint end of the AGN luminosity
function at cosmologically interesting redshifts.
