From (2), you know that S contains at least {2}. There is no other guarantee that anything else is in the set... but let's look at the rules:
i) says that if a is in the set, then -a is in the set.
Now you know that -2 is also in the set.
ii) says that if a and b are in the set, then a*b are in the set.
We know that S at least contains {2, -2} now we have an a and a b. In this case, a = 2 and b = -2. Now you know that a*b is in the set, by definition, and therefore -4 is in the set.
So (B) is sufficient.
Other observations, S is going to become an infinite set in 2 as S becomes {2, -2, -4, 4, 8, -8, 16, etc...}
Statement 1 only guaranteed that S is {1, -1}... and then unknowns
Just remember that a and b are not specific numbers, but any of two different variables.