great explanation answer is D

IMO D

need to use singular Sloth because "ITS" is used, this leaves D & E only

E is stating phrase and clause are parellel this is wrong

Found throughout Central and South America,
sloths hang from trees by long rubbery limbs and sleep fifteen hours a day,
moving infrequently enough that two species of algae grow on its coat and between its toes.

found… is a modifier referring to sloths.
…., moving infrequently …. Modifies the complete clause sloths….day. This is not correct. We are expecting a parallel list in this sentence.
There is a parallel list in sloths hang… and sleep.
Notice the pronoun its in the non underlined portion of the sentence which requires singular noun the sloth and not sloths.

(A) sloths hang from trees by long rubbery limbs and sleep fifteen hours a day, moving infrequently enough

(B) sloths hang from trees by long rubbery limbs, they sleep fifteen hours a day, and with such infrequent movements
The parallel list is hang(verb)… they – is ambiguous and they sleep and with such…
The list is not parallel and hence incorrect.
Notice the pronoun its in the non underlined portion of the sentence which requires singular noun the sloth and not sloths.

(C) sloths use their long rubbery limbs to hang from trees, sleep fifteen hours a day, and move so infrequently
The parallel list is use…, sleep and move..
But the main action is to hang and not to use
Notice the pronoun its in the non underlined portion of the sentence which requires singular noun the sloth and not sloths.

(D) the sloth hangs from trees by its long rubbery limbs, sleeping fifteen hours a day and moving so infrequently
This is the correct answer.

(E) the sloth hangs from trees by its long rubbery limbs, sleeps fifteen hours a day, and it moves infrequently enough

Hangs…, sleeps and it moves – this list is not parallel because we have verb,verb and pronoun verb.