I will try to write an answer to my own question here. Please correct me if I have made a mistake anywhere.
Let $R = k[[x^2,x^3]]$ and $S = k[[x^2,x^3]][y]$.
Since $R$ is a local ring $K_0(R) \cong \mathbb{Z}$. Now for a commutative ring with unity $R'$ there is always a natural surjection $$\operatorname{rank} \oplus \det: K_0(R') \rightarrow [\operatorname{Spec}(R'),\mathbb{Z}] \oplus
\operatorname{Pic}(R'),$$
where $[\operatorname{Spec}(R),\mathbb{Z}]$ is the ring of all continuous functions from $\operatorname{Spec}(R)$ to $\mathbb{Z}$.
I will first compute $\operatorname{Pic}(S)$ by constructing the following Milnor square
$$\matrix{k[[x^2,x^3]][s]&\rightarrow& k[[x]][s]\cr
\downarrow&&\downarrow\cr
k[s]&\rightarrow &k[[x]][s]/(x^2)[s]\cr}$$
Now because of the Unit Pic sequence, and the fact that Picard group over a UFD is trivial, we conclude that $\operatorname{Pic}(S) = (k[[x]][y]/(x^2)[y])^{\times}/k^{\times}$ (unit group). Which is nontrivial. Thus $K_0(S)/I \cong \mathbb{Z} \oplus\operatorname{ Pic}(S)$. Now if $K_0(S) \cong \mathbb{Z}$ then we have a contradiction.