Interesting discussion on this one! Mohit, your understanding of past and present participles (doing vs. feeling) definitely seems to have helped you here -- let me offer another way to think about the distinction between C and D, and hopefully clarify a rule about relative pronouns.
Remember that we want to avoid any kind of ambiguity in answer choices -- the GMAT loves clarity and concision. So let's look at answer C:
the works of Edgar Allan Poe, ignored in his native country, the
The meaning isn't totally clear here. Was it the works that were ignored, or Poe himself? Grammatically, either is a possibility, so this choice is ambiguous. Now let's look at answer D:
the works of Edgar Allan Poe which were ignored in his native country, the
Now we have the relative pronoun "which" introducing the modifying clause. "Which" can never refer to a person (we would use "who" instead), so it's clear that the modifier is describing the noun "works." We've eliminated the ambiguity here, so D is correct.
A few of you have mentioned the placement rules for relative pronouns. Remember, a relative pronoun (like "which") must be as close as possible to the noun OR NOUN PHRASE it modifies. The noun phrase in this sentence is "works of Edgar Allan Poe," so a relative pronoun could correctly modify EITHER "works" or "Edgar Allan Poe." We need to use the logic of the sentence to determine the appropriate construction.