To increase in a stitch you knit into the front of it as usual, leave it on the needle, then knit into the back leg of it. In this pattern, you don't increase in the last stitch, but in the one before the last stitch. There's also a video here on the Increases page. Maybe your sts are twisted and that's why they're so tight? Or you just knit tight. Stop that; you don't need to pull the yarn to tighten or even up a stitch, working the next one will do that.
sue- knitting heretic