Step II Can one still match?

Get help with your application

Use all the free resources available to you from SDN: articles, guides, expert advising, forums discussions, and school research.

As of 2008, DO candidates are required to pass PE in order to graduate & since you cannot graduate you cannot start residency.
Your best bet is to take it again ASAP & hope that the results come back before your school's graduation deadline.

Good Luck.