Round 4 *yo, k2togtbl, k2tog, yo, p2, repeat from * to end of round.

Usually you can't start a row with a yarn over, but because this pattern is knit in the round you can!  Nonetheless, yarn over's before and after purl stitches can sometimes be a cause for confusion.  Here is a bit of clarification for you:

Yo, k2togtbl,  this is an interesting situation. Because you are going from a purl to a yarn over, you don't actually wrap the yarn around the needle.  Instead, what you do is simply leave the yarn in the front (from the purl stitch) and go directly into k2togtbl.  Just make sure that when you make the next stitch that you wrap the yarn loosely.  Remember, you need to make enough room for your needle on the next round when you knit into the yarn over.

K2tog, yo, p2, this next step is also an interesting situation.  Becasue you have just knit 2 together your yarn is in back, the next stitch is a yarn over, so you need to bring your yarn to the front, but the following stitch is a purl, so you need to wrap the yarn around the needle again to accomodate for that, otherwise you won't be left with a yarn over.  To put it another way, when you go from a knit to a purl with a yarn over in between, wrap the yarn once for the yarn over, then bring it around again for the purl stitch.