Yeah, a square root has two values. The error arises by choosing the wrong sign leading to the difference of 2 on each side. Write line 3 as (3-4)(3-4) = (5-4)(5-4) and it becomes obvious that you can properly divide through by either (3-4) or (5-4), for example:

(3-4) = (5-4)(5-4)/(3-4) = 1x1/-1 = -1