Sure, RBBmba@2014!

His studies of ice-polished rocks in his Alpine home land, far outside the range of present-day glaciers, led Louis Agassiz in 1837 to propose the concept of an age in which great ice sheets had existed in now currently temperate areas.

(A) Incorrect. The past perfect had existed is incorrect. We use past perfect to describe a past event that preceded another event in the past. Use the simple past existed instead. Also, now and currently are redundant -- we don't need both.
(B) Correct. The simple past existed is correctly used.
(C) Incorrect. The relative clause where there were areas now temperate is awkward. The ice sheets existed in certain areas; now it sounds as if the ice sheets are in a location along with other areas.
(D) Incorrect. The past perfect is incorrect. Also, the contrast between the areas as being temperate now, though they were not long ago, is no longer clear.
(E) Incorrect. The placement of now after existed in areas makes it sound as if the ice sheets existed (past)...now (present), which of course doesn't make sense. Now needs to be close to are temperate to make it clear that it modifies are temperate.

In general, adverbs and other modifiers should be as close as possible to the thing they modify in order to avoid confusion.

Let me know if I can clear up anything else!

Hi Spencer - thanks for your reply.

A quick clarification on B - the intended meaning of this correct option is great ice sheets existed in areas that are now temperate. Right ?

Then isn't the fragment "existed in what are now temperate areas" given in the correct option bit awkward ? Shouldn't the term 'areas' come immediately following the preposition 'in'?

RMMmba@2014,

The way you phrased it is also correct. In fact, the two construction are grammatically equivalent. In Answer (B), what is a relative pronoun that stands for "areas":

...existed in what are now temperate areas.
...existed in areas that are now temperate areas.

Using what as a pronoun is not uncommon. For example:
I like what you're wearing today.
I like the clothing that you're wearing today.
I like what you're wearing today (for clothing).

So both options are correct, even if we may be more accustomed to hearing one.

Keep in mind that the correct option is not necessarily the most ideal (the way we think it should be said), and sometimes it can even sound a bit odd. But in such cases the correct answer will still be grammatically correct, and the other four choices will have clear grammatical errors.

Appreciate the follow-up, RBBmba@2014. Let me know if you have any other questions!