Slave can't drive I2C bus low
The datasheet says Side 2 will draw 1.6 to 2.8mA when connected to 3.3V. The resistor setup you've provided draws 1.5mA from each resistor if both SDA and SCL are low, exceeding the source limit.

You can increase the resistor size so that they only used .5mA each, but that will increase RC time constant an limit your I2C clock speed if you need a fast I2C that is.

Otherwise you could use a 3.3v regulator on the slave side to take the power supply away from the slave.