Sentence Correction

Any medical test will sometimes fail to detect a condition when it is present and indicate that there is one
when it is not.
(A) a condition when it is present and indicate that there is one
(B) when a condition is present and indicate that there is one
(C) a condition when it is present and indicate that it is present
(D) when a condition is present and indicate its presence
(E) the presence of a condition when it is there and indicate its presence

Official explanation says:
In choices A and B, the phrase indicate that there . is one does not grammatically fit with when it is not because it has no referent.

Could someone explain why it does not have any referent. I thought second 'it' refers to 'it' in the first when clause, therefore we know what second it is referring to.

Hi raizada ..
U r right while sayigng that second 'it' refers to first 'it' and eventually to 'condition' (bcoz the first it refers to condition).
So it should be 'it' which shall be used here again instead of 'one' bcoz when the sentence says

'indicate that there is one when it is not'

it may suggest that 'one' and 'it' r referring to 2 different objects bcoz of 2 diff. referrers. And bcoz there is no second object to refer .. thay say "there is no referent".

That is why choice C is correct bcoz it uses 'it' at both the places. It could have been 'one' as well at both the places but that would correct the latter part of the sentence only and not the whole sentence because of creating the similar confusing situation with the first 'it'.

Hope i m clear enough in explaining ...

Thanks austrologer!

Your explanation is excellent and carifies this pronoun mess.