Sorry. I think I'm in a different time zone to you...
I can see where the script is failing. Line 105:
<div id="post-<?php the_ID(); ?>" class="<?php echo attribute_escape(k2_post_class($post_index++, in_category($k2asidescategory), false)); ?>">
Looks like there's a fatal error within the attribute_escape() function which, in itself, appears to use at least 2 different functions. How many posts is this happening on? Have you pasted content in from Word or any other word-processor application? What about category names or descriptions? Any unusual characters in those?
Gut instinct is that this is a character issue. Might be worth contacting the K2 author and seeing if s/he can throw any light on it.