IMO A.
B - wrong use of which
C,D,E- wrong use of not only .. but also
Not only did the systematic clearing of forests in the United States create farmland (especially in the Northeast) and gave consumers relatively inexpensive houses and furniture, but it also caused erosion and very quickly deforested whole regions.
A. Not only did the systematic clearing of forests in the United States create farmland (especially in the Northeast) and gave consumers relatively inexpensive houses and furniture, but it also
B. Not only did the systematic clearing of forests in the United States create farmland (especially in the Northeast), which gave consumers relatively inexpensive houses and furniture, but also
C. The systematic clearing of forests in the United States, creating farmland (especially in the Northeast) and giving consumers relatively inexpensive houses and furniture, but also
D. The systematic clearing of forests in the United States created farmland (especially in the Northeast) and gave consumers relatively inexpensive houses and furniture, but it also
E. The systematic clearing of forests in the United States not only created farmland (especially in the Northeast), giving consumers relatively inexpensive houses and furniture, but it
A is the lesser evil, if not perfect.
Not only did the systematic clearing of forests in the United States create farmland (especially in the Northeast) and gave consumers relatively inexpensive houses and furniture, but it also caused erosion and very quickly deforested whole regions.
what does "it" refer to in A?

I will go with B.
A says - "Not only... but it also". That's the reason for exclusion.
Official Answer please.
Any man's finest hour, his greatest fulfillment to all he holds dear, is that moment when he has worked his heart out in a good cause and lies exhausted on the field of battle... victorious.

Check 800Bob's opinion in the URL below.
I think the logic might be that we use "not only X but also Y" were the logics of X and Y are in apposition.
Not that the effects of the systematic clearing of forests (created farmland and gave houses and furniture, and caused erosion and deforested the whole region) are contrasting. So, "systematic clearing did 1st+ve and 2nd+ve, but it also caused 1st-ve and 2nd-ve" shud be the appropriate structure.
http://www.urch.com/forums/gmat-sent...-but-also.html (question about not only...but also)
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