Exactly right - it means that the door closing catch isn't entering the keep, so the door can swing open. You'll find that the keep (the plate on the door frame) is actually adjustable with a screwdriver, but if its at its limit of adjustment it will need to be filed to give that little extra clearance. The keep has 2 slots - one for the handle bolt (the curved bit) and one for the lock bolt itself. It seems the slot that needs adjustment is the top one of the two.
John, January 2008