Later it develops aversion both for the book and the man who le

I'd be careful about trying to study SC from this question.

First, and most importantly, the GMAT will never present you with a sentence that relies on other, unseen sentences for its meaning. Here, we are left to ask "later than what?" and "what is it?" A correct SC sentence will not leave us asking such questions, and for that reason alone, all the choices are wrong. This is a sentence that makes perfect sense in the context in which it was presented, but that makes no sense on its own. After all, in the context of a dialogue, "Yes" is also a valid sentence, but it's not going to be the answer to an SC. (That's a shame, really--I would love to write a one-word SC that actually worked!)

Second, "lent him it" is not likely to fly on the GMAT. It isn't grammatically incorrect, but it's a dialectical usage that I believe is more common in UK and Indian English than in US English. I searched for this text and found that it comes from a humorous essay by the great R.K. Narayan. His mastery of the language is certainly well-established, but this isn't a usage we'd be likely to see in a GMAT answer, correct or otherwise.

Also, the question as written omits a crucial word from the original text that makes the meaning a bit more clear: "Later it develops into an aversion both for the book and the man who lent him it." The "it" in question is the attitude of a man to whom the author has lent a book. In fact, when I look at the original passage, I still don't ever see a single noun, such as "attitude," that serves as an antecedent for "it." This is another crucial difference between real-world writing and SC. In writing, especially literary writing, a sentence is correct as long as it conveys what the author wants it to convey. On the GMAT, we are a bit more rule-bound and need a clear antecedent for every pronoun.

So by all means, read great literature, but don't try to extract SC directly from that literature, especially on a sentence-by-sentence basis.

Can someone explain why E is wrong?
My hypothesis was that there are 2 objects - the book and the man- therefore, the use of "an" might be inappropriate.