I think that this is an excellent question that contains a number of grammatical concepts that are critical to understand for test day.
Note the use of the placeholder 'it'. In this sentence 'it' does not actually stand for any particular noun or pronoun.
There is also parallelism being tested. We can see the 3-2 split in the answer choices quite clearly: "...digital cameras to capture...to project them" is the correct construction
Additionally, there are some pronoun usage errors in the incorrect choices.
A.
for projecting them digitally in theaters with no loss of image quality
B.
for projecting them digitally in theaters without having image quality lost
C. to project them digitally in theaters without
their losing image quality
D. to project them digitally in theaters with no loss of image quality (Correct)
E. to project them digitally in theaters without
it losing its image quality
A few questions for the community:
RE: Verb tenses - I often seen verbs like "have been" or "have made" (in this sentence). What verb tense is that? Is it simply the past tense? Which of the two words "have" and "made" is the main verb and which is the helping verb?
RE: "it" - is the placeholder it the same as the expletive it? I know that it doesn't stand for any noun or pronoun, but does it stand for anything else?