I am having difficulty in setting up paragraph numbering the way I want.

What I am trying to achieve is as follows:

1) Line 1
2) Line2


a. Line 3
b. Line 4

Line 5

Where Line 5 is part of 2) (not b.) but is not numbered.

When I do this I get to the point:

1) Line 1
2) Line2
a. Line 3
b. Line 4

Line 5

But if I do the shift tab to bring Line 5 back to the higher level Line 4 also shifts so it winds up as follows:

1) Line 1
2) Line2
a. Line 3
3) Line 4

Line 5

Is there a way around this problem?

Make Line 5 item c. like this:
1) Line 1
2) Line 2
a. Line 3
b. Line 4
c. Line 5

and then put your cursor before the L of Line 5, then hit backspace once.

Numbering should be done linked to styles. See How to create numbered headings or outline numbering in Ribbon Versions of Word by Shauna Kelly.

The unnumbered paragraph can be in a separate, unnumbered style that is set up the same way as one of your levels.

Understanding Styles in Microsoft Word

It sounds like you are working in outline view.