"Thousands of people were forced to" is correct.
"Evacuate their homes around Taal" has an error. The correct form is "around Taal, one of the world’s smallest active volcanoes," since "volcano" should be plural.
"Which spewed ash for the second day" is correct.
"From its crater in the middle of the lake" is correct.
Thus, the error is in option (2), where "volcano" should be changed to "volcanoes."