IMO (E).
There is some serious problem with this question. IMO we cannot directly cancel the powers for LHS.
Since, the answer is given as (B), so let me try first to prove statement II as insufficient.
-x * |x| > 0
It clearly means that x should be negative or x < 0
Now suppose, x = -1
then by the given statement, "sqrt((x-3)^2) = 3 -x"
sqrt((-1-3)^2) = 3+1
(-4)^(2/2) = 3+1
if we directly cancels the power for LHS then it means -4 = 4. Which is wrong.
But IMO, we cannot do so, hence, modified equation will be like this...
=> sqrt((-4)^2) = 4
=> sqrt(16) = 4
on doing the square root for LHS, the answer will be +- 4 (i.e. both positive and negative value of 4).
which is again insufficient to deduce the answer.
Same case for statement I.
Hence, in my opinion, answer should be (E) rather (B).
Did I miss something??? Any help will be gratified.