You can't always use just any increase, doing a different one from what the pattern intended can come out to the wrong number of sts. For this one it looks like it should be a kfb, so you k1, kfb all the way around. If you'd rather use a m1 then you k2, m1, all the way around.
The pattern round - S1, K2tog, psso, K1, P2, K2, P2, K2, rep from * around to last repeat of this pattern. Instead of slipping a st and K2tog, knit/purl to the end (should be 2 extra sts) - isn't sort of ribbing; it will kind of look like a k2, p2 rib. On the following round this - K/P in pattern - means to knit the knit sts and purl the purl sts which will be k2, p2, not 1x1.
sue- knitting heretic