It seems that the ptPlanarLips command is not working in the latest Rhino 5 release.
Operating System: Windows 7 64 bit
Rhino Version: 5.0 (5.1.2012.207, 2/7/2012)
Paneling Tools Version:PanelingTools_8Dec2011_WIN64
Command options: (Output=Surface, ConnectEdges=No, TypeofDistance=Uniform, DeleteInput=No, Distance=.5)
The images below are showing what I am seeing.
I see the bug. Will look into it today.
Thanks for the report.