This comes out right for me.
Below are a couple of things to check (and note):
Does the pattern say "repeat 4 times more"? Because you need to repeat the stitches between the asterisks 5 times total to get to 165 (then add the last stitch after the repeat).
Also, yo's do not use any stitches to make a new stitch. You are simply wrapping the yarn around the needle (you may want to take a look at the Glossary tab at top to make sure you're doing these right--'cause you wrap the yarn differently before a purl stitch and a knit stitch).
Both the SK2P and the K3tog take 3 stitches to make 1 (so a decrease of 2 stitches).
There are two things to be aware of when counting stitches in knitting: One is how many stitches you USE, and the other is how many stitches you MAKE.
In this pattern, row 1 will have the same number of stitches as the foundation row (but note: that's not always the case). So when you count out how many stitches you will USE, it looks like this: regular knit and purl stitches = 27 stitches within repeat + 1 at end; SK2P and K3tog = 6; yo's = 0 (because you don't use any stitches to make them) Which gives you 27 + 6 = 33 repeated 5 times = 165 + 1 knit stitch at end.
When you count how many stitches you MAKE, it looks like this: regular knit and purl stitches = 27 stitches within repeat + 1 at end; SK2P and K3tog=2 (this how many stitches are on your needle after you've completed each decrease); yo's = 4; So again, that's 33 stitches repeated 5 times + the 1 stitch at the end!
Hope I didn't overwhelm you, but this can get tricky if you're not thinking about it right.