I recently got a K-5 IIs, and found that it can't be adjusted to under ISO 200. Even with expanded ISO mode, 160 is the lowest possible value.
Can anyone help me out?
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You apparently have Highlight Correction activated. This forces the higher ISO limit (usually forcing it from 100 to 200, though you also have Expanded Sensitivity enabled, which gives you a broader ISO range starting at 80, thus now 160).
So, there's nothing wrong with your camera.
Mind you: Options you find that look superior may come with a downside. Nothing's for free, and there are reasons why Pentax hasn't enabled every seemingly powerful option by default. ;)