No, it does not, and the theory is in no way "fundamentally flawed". Sadly, to adequately cover this, it would take a book. Fortunately there is a book out there that does cover this.

A Universe From Nothing by Lawrence Krauss.

Or you can check out this video.

The basic gist of it is basically because the universe is energy neutral. I guess the easiest way to think of it is to think of the universe as the start of digging a hole in the dirt. As you take dirt out to make the hole, you are placing that dirt in a pile next to you. In this way, there is nothing that is being specifically created without something else maintaining the balance. Again, in terms of the universe, this is a way over simplified analogy... Everything that we know about the universe, no laws are being violated.

As for your citation, keep in mind that this is an old citation. Furthermore, it seems to be confused about what overall entropy means, as opposed to local entropy. There is also a confusion as to what Dr. Ross means by an open system. If the universe is all that there is, how can it be anything other than a closed system? If you read Dr. Krauss's book, you should see there is no violation of any sort. Furthermore, I don't know anything about the quote, but I am suspicions of it being quote-mined since it starts in the middle of a sentence.

No, it does not, and the theory is in no way "fundamentally flawed". Sadly, to adequately cover this, it would take a book. Fortunately there is a book out there that does cover this.

A Universe From Nothing by Lawrence Krauss.

Or you can check out this video.

The basic gist of it is basically because the universe is energy neutral. I guess the easiest way to think of it is to think of the universe as the start of digging a hole in the dirt. As you take dirt out to make the hole, you are placing that dirt in a pile next to you. In this way, there is nothing that is being specifically created without something else maintaining the balance. Again, in terms of the universe, this is a way over simplified analogy... Everything that we know about the universe, no laws are being violated.

As for your citation, keep in mind that this is an old citation. Furthermore, it seems to be confused about what overall entropy means, as opposed to local entropy. There is also a confusion as to what Dr. Ross means by an open system. If the universe is all that there is, how can it be anything other than a closed system? If you read Dr. Krauss's book, you should see there is no violation of any sort. Furthermore, I don't know anything about the quote, but I am suspicions of it being quote-mined since it starts in the middle of a sentence.