A,B, C are wordy. Between D and E, E is right because lay here is past tense of lie (to recline or be located). Laid in D is past tense of lay, which means to put. Laid also needs an object.
233. Darwin was not the first to advance a theory of evolution; his tremendous originality lay in the fact that he proposed the idea of natural selection as the means by which evolution worked.
(A) lay in the fact that he proposed the idea
(B) lay in the fact of his proposing the idea
(C) laid in the fact of his proposing the idea
(D) laid in his proposal
(E) lay in his proposal