I would go for c as it is better than e. Correct use of modifier and makes sense, too.

C it is

All except C have improper modification.

A. Clouds are formed from the evaporation of the oceans' water that is warmed by the Sun and rises high into the atmosphere, condensing in tiny droplets on minute particles of dust.

1.condensing in tiny droplets on minute particles of dust seems to refer the subject of the core sentence - clouds. : illogical reference
Core sentence :
Clouds(subject) are formed + adverb

2. it would be better:

Clouds are formed by X -- with passive we use by phrase --

B. Clouds form by the Sun's warmth evaporating the water in the oceans, which rises high into the atmosphere, condensing in tiny droplets on minute particles of dust.

1. Clouds form - wrong, it should be "clouds are formed".
2. upon removing the core modifier :

Clouds form by the sun's warmth evaporating the water in the oceans condensing in tiny droplets on minute particles of dust. - this is obviously a flawed sentence.

C. Warmed by the Sun, ocean water evaporates, rises high into the atmosphere, and condenses in tiny droplets on minute particles of dust to form clouds.

Warmed by the sun - past participle modifier acting as an adverb of cause for the "ocean water evaporates" --
warmed - adjective referring to ocean water.

perfect parallelism :

evaporates, rises high into the atmosphere, and condenses in tiny droplets on minute particles of dust to form clouds

all three similar ideas are presented in parallel structure

D. The water in the oceans evaporates, warmed by the Sun, rises high into the atmosphere, and condenses in tiny droplets on minute particles of dust, which forms clouds.

Which refer to only dust --- cannot refer to the whole action -- incorrect

E. Ocean water, warmed by the Sun, evaporates and rises high into the atmosphere, which then condenses in tiny droplets on minute particles of dust to form as clouds.

1. Which refer to the atmosphere

Hope this helps !!

sam2304 wrote:Clouds are formed from the evaporation of the oceans' water that is warmed by the Sun and rises high into the atmosphere, condensing in tiny droplets on minute particles of dust.
A. Clouds are formed from the evaporation of the oceans' water that is warmed by the Sun and rises high into the atmosphere, condensing in tiny droplets on minute particles of dust.
B. Clouds form by the Sun's warmth evaporating the water in the oceans, which rises high into the atmosphere, condensing in tiny droplets on minute particles of dust.
C. Warmed by the Sun, ocean water evaporates, rises high into the atmosphere, and condenses in tiny droplets on minute particles of dust to form clouds.
D. The water in the oceans evaporates, warmed by the Sun, rises high into the atmosphere, and condenses in tiny droplets on minute particles of dust, which forms clouds.
E. Ocean water, warmed by the Sun, evaporates and rises high into the atmosphere, which then condenses in tiny droplets on minute particles of dust to form as clouds.

Please explain your choice.

IMO: C , Parallel