IMO "D".....not X....but [rather] Y....

only D follows this paradigm with parallelism.

The argument that the dominant form of family structure today is not the nuclear family, but rather it is a family which is modified and extended, is based on a number of facts: the existence of three-generational families, the amount of vertical and horizontal communication between family subunits, and the extent to which family members offer assistance to one another.
(A) family, but rather it is a family which is modified and extended, is based on a number of facts: the existence of three-generational families
non parallel idiomatic usage.

(B) family, but is instead a family that is modified and extended, is based on a number of facts: three-generational families exist
wrong idiom.

(C) family, which has been modified and extended, is based on a number of facts: the existence of three-generational families
we need to show contrast...."which" more about the noun preceding the same.

(D) family but a modified extended family is based on a number of facts: the existence of three-generational families
Correct.

(E) family, but also a modified and extended family, is based on a number of facts: three-generational families exist
wrong idiom....