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Reopened: Problem not addressed.  Please *read* my previous comment.

Yes, the script has a bug in it.  That's not what's being reported here.

The bug is in the backtrace produced by the Python interpreter.  See below.  
Line number reported for lambda function raising exception is line 14 below.  
Actual line number for lambda generating exception is line 18.


$ python lambda_bug.py
Traceback (most recent call last):
  File "lambda_bug.py", line 23, in ?
    seqtest()
  File "lambda_bug.py", line 19, in seqtest
    seq_func1(nextkey2, num_elem+2)
  File "lambda_bug.py", line 5, in seq_func1
    key_genfunc()
  File "lambda_bug.py", line 14, in <lambda>
    nextkey1 = lambda N=keynums1,K=key_src: K[N.pop()]
IndexError: pop from empty list