VERITAS PREP OFFICIAL SOLUTION:
As you assess this problem before diving in, you should notice two major decision points: the sentence draws a Comparison, and there is an "is vs. are" Agreement split at the first word. So as you read the sentence you should be looking for singular vs. plural subject-verb agreement and considering which items are being compared.
The most immediate decision is "is vs. are," and you should see that the subject is the singular "element." If you remove the prepositional modifier "of the many that make up our justice system" you're left with a standard sentence:
No element is more in need...
Therefore you can eliminate the plural "are" choices, (A) and (D).
With the remaining choices, note that (B) and (E) each include "that of" in their comparison, whereas (C) does not. The sentence is comparing elements of the justice system, "the penal system" vs. other elements. There is no need for a possessive "that of" - the inclusion of it confuses the comparison - so (B) and (E) can be eliminated, leaving (C) as the correct answer.