The "length" of a rectangle is the length of its longest side. Quoting wikipedia on the subject (which is just restating what is conventional in mathematics in general), "length most commonly refers to the longest dimension of an object." So length cannot be less than width, and the answer to the question in the original post ought to be D. Where is the question from?
In any case, because the purpose of the GMAT is not to test whether you're familiar with obscure mathematical conventions, no real GMAT question would ever be ambiguous about this type of thing. If the question in the original post were to appear on the GMAT, Statement 1 would read something like "the length of the window is 2 feet greater than its width".
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