Here 'it' refers to Water
Hence we need water after the comma
So now from D and E
The key word here is 'when' hydrogen and oxygen,[extra info] , come in contact

Hence E

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The structure of the sentence is --->Depended Clause, Independent clause


Intended Meaning: Although wather looks peaceful in glass, it is formed in a some reaction. This reaction happens when Hydrogen and Oxygen come is mixed with some molecular thing.
Errors in the given sentence:
1. As the sentence starts with 'Although it', it should follow the proximity rule and should be next to the modifier, which is intended to modify. It doesn't make sense to say that the Reaction looks peaceful, it is water, which looks peaceful.

2. As per the intended meaning, Water is not created from Hydrogen and Oxygen, Water is created when these two chemicals are mixed with something. So, Using 'From' doesn't make any sense.

Answer choice Analysis:

A. an explosive exothermic reaction forms water from -- Wrong for the two reasons mentioned above
B. an exothermic reaction explosively forms water when -- it corrects the 'From' Error mentioned above , but modification error still exists
C. when water is formed in an explosive exothermic reaction, -- Now, this changes the meaning and sequences of the original sentence. Moreover, the 'Although it...Modifier' have no proper entity
D. water is explosively formed in an exothermic reaction from -- Modifier issue fixed; use of preposition 'From' changes the meaning; the word 'explosively' is modifying 'Formation' of water, but in the original sentence, Explosively is intended to modify the 'Exothermic reaction'
E. water is formed in an explosive exothermic reaction when -- Correct choice


Hope that Helps
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