Here is the solution to the problem with this pattern.
Somewhere, somehow there were an extra 2 sts in the pattern. We don't know when, why and how, but ...it happened.
The pattern should read:
CO 34 sts. Begin Lace Patt.
Row 1: K2, pm, *yo, sl 1, k1, psso k5, repeat from * to last 4 sts, yo, k2tog, pm, k2
Row 2 (and all even rows): all correct
Row 3, 5, 7, 9, 11: should have "K2,..." instead of K4 in the beginning.
Now, this should works.