That is incorrectly used to introduce non essential modifier. As a general rule in GMAT that is not preceded by a comma.
A B C out
(A) man is good only when in “the state of nature” but is corrupted by society
, that(B) only man is good when in “the state of nature” but is corrupted by society
, that(C) man is good when in “the state of nature” but is corrupted only by society
, that(D)
only man is good when in “the state of nature” but is corrupted by society, which - changes meaning of the sentence.
(E) man is good only when in “the state of nature” but is corrupted by society, which