After the opening modifiers in "A" & "B", the main subject that is "theory" should appear as the pronoun "it" in the opening modifier should ideally refer to the "theory" and not "problem".
Similarly, in "C" the opening modifier erroneously modifies problem. However, its intended to modify "theory".
"E" is wordy and awkward because of the placement of the "which: modifier and the usage of "its treating".

Hence, by POE "D" should be our answer.
Please let me know the OA.

A> Correct though it may seem, the problem with the theory is that it treats several other explanations as unreasonable, which are all in fact quite possible. - The opening modifier is awkward and has a placeholder "It" which has ambiguous antecedent (can be "the problem" or "the theory").

Even though it seems correct, the problem with the theory is that it treats several other explanations as unreasonable, when they are really quite possible - Placeholder "It" has ambiguous antecedent (can be "the problem" or "the theory". Also the closing modifier starts with "when". When should be used to describe time and not a situation

Though possibly correct, the problem with the theory is that it treats several other explanations as unreasonable when in fact they are possible. - Opening modifier incorrectly modifies "the problem". Also the closing modifier starts with "when". When should be used to describe time and not a situation

Though the theory seems correct, its problem is that it treats as unreasonable several other explanations that are actually quite possible.- correct

The problem with the theory, which seems correct, is its treating several other explanations as unreasonable when in fact they are actually possible. - "Its treating" - usage of present continuous to describe a general rule is incorrect usage of tense. Also when is used to describe a situation

A B C have modifier problems. 'the problem' is modified instead of 'the theory'.
Came down to D and E. In E, using 'when' to refer to explanations and the usage of 'its treating' look awkward.
Hence, D !

Could i please request an expert to help us with this question.