I don't really like any of the answer choices, but still let's see whether there is a way one can hack one's way to the best one.

A) This choice is a mess and it can be eliminated because it's not clear who or what was testing the windows operating system. If anything, it seems that the sentence is conveying that the three big application packages were testing the system, and that meaning does not make sense.

B) There is no independent clause here. This choice starts with a modifier, then there is a noun followed by another modifier. All verb structure are parts of modifiers. So really this is a structure that is not a sentence, because it has only a subject and no verb.

C) I actually don't see any real issues in this choice, well, other than the questionable validity of the expression combined in it.

D) There is no independent clause here either.

E) This choice seems ok too, although once again it includes the expression combined in it.

So we are between C and E, and both seem equally sort of ok.

I see that the original says something about testing and C does not. Also, C includes the use of the passive voice, which is supposedly to be avoided in GMAT SC.

So maybe E is the better answer according to the writer of this question.

Having said that, I am not sure that it makes sense that Bill Gates would combine the application packages only when testing the system. To me it would make sense that the three packages would have been combined to create the system long before testing would have been undertaken.

Also, I am not sure why leaving out the word "testing" renders C worse than E. Does the sentence have to be about testing? The original is a mess anyway, and further the way that this question works is not the way official questions work.

So while there are some things to be learned from this question, it is rife with issues.