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D is very close. But the reason I didn't select D is (1) A vague terminology such as "a very general application" (2) D also says that the flaw is not basing the conclusion on more number of fossils. But the argument says that such a fossil has been previously found only in ocean-floor sediments and hence narrow range is not a problem. Even if more fossils are found like that it doesn't make a difference.
E is to the point saying precisely there is an inconsistency and the use of the word "must" in the conclusion suggests that the author is not considering other possibilities. The other possibility for example maybe that it may be the evidence of the first sort that has been found other than in ocean sediments as suggested in the phrase "previously found only in"
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