Pivots giving too many results
It's getting upset about your other columns. So try:

SELECT [NEW]
,[IN]
,[OUT]
,READY = [READY FOR DISPOSAL] 
,TRANSIT = [IN ROUTE TO DISPOSAL]
,[DISPOSED]
,[TYPE] = [ItemType] 
FROM (SELECT ItemType, Status FROM [EVAULTTEST].[dbo].[Items]) AS ei

PIVOT(
COUNT([Status])
FOR [Status] IN ([NEW], [IN], [DISPOSED]
, [IN ROUTE TO DISPOSAL], [OUT], [READY FOR DISPOSAL])
) AS piv


... and this is because the implicit grouping is on any column that's not in the PIVOT clause. So removing the extra columns in the first part of the query should fix it.