Another couple good questions, and yeah, it's a tough call between (D) and (E) here.

In answer to your

How do we know that only PARTLY has to be parallel and not PARTLY BECAUSE?

First, to clarify, it's not that PARTLY is parallel with PARTLY, it's that the things that follow the PARTLYs (the X and Y in "partly X and partly Y") are parallel with each other. Now, the deal with parallelism is that as long as you can create SOME valid justification that two things are parallel, you're okay... if someone comes along as sets the standards tighter to try to prove that the things aren't parallel, he'll be being too picky, and you'll still be right. So you have some liberty there, and you're totally allowed to say "I want my setups for the parallel parts just to be 'partly' and 'partly', and I want the things after the 'partly's to be parallel with each other."

Both (D) and (E) satisfy the requirement of making the X and Y in "partly X and partly Y" parallel, because our Y is "because crossbreeding is said to provide hybrid vigor," which is an adverbial phrase, and both of our candidates for X -- (D)'s "because certain characteristics should be acquired by their steers" AND (E)'s "to acquire certain characteristics in their steers" -- are also adverbial phrases. So it's actually NOT the case that

TO ACQUIRE has to be parallel to TO PROVIDE

-- we are fine now on the parallelism front regardless. Unfortunately, the only thing that knocks out (D) and makes (E) the correct answer is the last-resort thing -- awkwardness of phrasing. (D) is just wordy and the passive voice results in an awkward construction ("should be acquired by their steers"), so we eliminate it and go for the nicer-sounding (E).

Cheers!

Hi,
I think parallelism exists only to the extent of 'partly' ... 'partly'. The rest of the issue is all about meaning.
The breeders crossbreed in order to get something they intend and these characteristics are acquired in their steers not 'by their steers'
Hence, E

Cheers!