When multiplication is non-commutative, you have to apply the product rule for derivatives more carefully: $$\frac{d}{dt}(K(t)^2) = \frac{d}{dt}(K(t) \cdot K(t)) = K'(t) \cdot K(t) + K(t) \cdot K'(t)$$ Notice the different ordering of the 2 terms on the right side. This is _not_ equal to $2 K(t) K'(t)$ unless $K(t)$ and $K'(t)$ commute. So (2) is wrong so (7) is also wrong.