IMO D:

claimed to have require some sort of contact, but direct contact is better than contact..with that directly...

Coming back to direct contact out of two given options:

B. direct contact with it by way of
It can refer to either of material or mystical
D. direct contact with the latter by means of
Later here is needed to emphasize dream experience..as otherwise there is no point talking about dream and material...

I also vote for "d"

The Quechuans believed that all things participated in both the material level and the mystical level of reality, and many individual Quechuans claimed to have contact with it directly with an ichana (dream) experience.

A. contact with it directly with
it ambiguous.

B. direct contact with it by way of
it ambiguous.

C. contact with the last directly through
"later" not "last"

D. direct contact with the latter by means of

E. contact directly with the mystical level due to
contact with level......."level" of what ? should be contact with "mystical level of reality"
Please correct me if I am wrong here.

imo:d

OA??