Okay, the mistake seems to have occured in row 6 or 7 of the pattern below. row 6 is the lace pattern, row 7 is all purl stitches.
Row 6: K2, *[yo, ssk] twice, k3, [k2tog, yo] twice, k1; rep from
* to last st, k1.
I have never ripped out stitches before, I am afraid I will drop more if I try. I am quite certain the mistake occured in row 6, I just don't know where.
I may just try to take the last 2 rows off the needle...