The source might say Statement 1 is sufficient, because by 'set' they might mean the true mathematical definition of 'set' - in math, a set is a group of distinct things. But if that's what they mean, there's really a problem with the question, because real GMAT questions don't test if you know the mathematical definition of a set. If repeated elements are important to consider in a real GMAT question, that question will tell you that you have a 'list of values', or a 'data set'. In a list or in a data set, it is perfectly fine to have repeated values. If a question only wants you to think of a collection of distinct values, it will say very clearly that the values in the set are distinct.
Here, if we know the values in the set are distinct, and if Statement 1 tells us the set does not contain any positive elements, then that guarantees the median of the set is negative (it can't be 0, because the set contains at least two elements). So if Statement 2 is sufficient, then Statement 1 must be, because Statement 1 is a special case of Statement 2.
And Statement 2 is sufficient. If the median is negative, then so must be the smallest element S. So we know
S < 0
If L is the largest element, then if we add L on both sides of this inequality, then subtract S from both sides, we find
L + S < L
L < L - S
which just says "the range is bigger than the largest element in the set". But the largest element is bigger than the mean in any set of distinct values, so the range must be bigger than the mean.
So the answer is either D or B, depending on what they mean by the word 'set'.
For online GMAT math tutoring, or to buy my higher-level Quant books and problem sets, contact me at ianstewartgmat at gmail.com
ianstewartgmat.com