Hi,
maybe it sounds weird but you are probably first here with this issue.
I tested latest version of template on my server , full SEF enabled and all works also K2 links.
seo.jpg
So it must be something with K2 issue I guess, check on their forum, this extension sometimes makes stupid surprises.
Probably that's why I do not use it anymore, because I think that default articles have good features. Less extensions means less problems. Most people even do not use 60% features of K2, so...