Statement of the Goldwasser-Sipser Set Low Bound Protocol
To succeed in distinguishing the case of $|S|\ge K$ from $|S|\le\frac{K}{2}$, you just need a constant gap (independent of $|S|$) in the acceptance probability in both cases. If you managed to achieve such a gap, then applying Chernoff to multiple executions of the protocol would achieve high success probability.
Observe that the interesting case is $k\le m$, since otherwise $K\ge 2^{k-2}\ge2^{m-2}$, and the verifier can convince himself that $|S|\ge K$ simply by sampling strings in $\{0,1\}^m$ uniformly at random and checking whether they belong to $S$ (in this case $|S|\ge K$ implies that the probability of falling in $S$ is at least $1/4$, so Chernoff with a polynomial number of samples yields the desired result). From now on assume $m\ge k$, and thus the hash functions are $h_{a,b}:GF(2^m)\rightarrow GF(2^k)$ given by $h_{a,b}=(ax+b)_{1...k}$, where $x_{1...k}$ in the truncation of a string obtained by taking the first $k$ bits.
For uniformly distributed $a,b\in GF(2^m)$, and every $x\in GF(2^m)$, $ax+b$ is uniformly distributed. This means that $\forall x\in GF(2^m): \Pr\limits_{\substack{a,b\in GF(2^m)\\y\in GF(2^k)}}\left[(ax+b)_{1...k}=y\right]=\frac{1}{2^k}$. We conclude that $\Pr\limits_{a,b,y}[\exists x\in S: h_{a,b}(x)=y]\le \frac{|S|}{2^k}$. On the other hand, we can lower bound the same probability by:
$$
\Pr\limits_{a,b,y}[\exists x\in S: h_{a,b}(x)=y]\ge\\
\sum\limits_{x\in S}\Pr\limits_{a,b,y}\left[h_{a,b}(x)=y\right]-\sum\limits_{x\neq x'\in S}\Pr\limits_{a,b,y}\left[h_{a,b}(x)=y \land h_{a,b}(x')=y\right]=\\\frac{|S|}{2^k}-\frac{}{}\binom{|S|}{2}\frac{1}{2^{2k}}\ge \frac{|S|}{2^k}\left(1-\frac{|S|}{2^{k+1}}\right).
$$
So far there were no restrictions on the size of $S$. Now, if $|S|\le K\le 2^{k-1}$ then $\frac{|S|}{2^k}\le\frac{1}{2}$, and we obtain $\Pr\limits_{a,b,y}[\exists x\in S: h_{a,b}(x)=y]\ge \frac{3}{4}\frac{|S|}{2^k}$. We conclude that if $|S|=K$ then the probability of acceptance is at least $\frac{3}{4}\frac{K}{2^k}$ (the bound trivially holds for larger $|S|$, just by taking a subset of size $K$). If on the other hand $|S|\le K/2$ then the acceptance probability is at most $\frac{1}{2}\frac{K}{2^K}$ and we have our constant gap $\ge\frac{1}{4}\frac{K}{2^k}$, and Chernoff completes the proof.