Hi EMPOWERgmatVerbal,
Thank you for this broad explanation of this question. Can I add choice F as possible correct choice?
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Possible Choice F:
F) Recently physicians have determined that stomach ulcers are caused not by stress, alcohol, and rich foods, but by a bacterium that dwells in the mucous lining of the stomach.
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The problem is that "are by" doesn't mean anything here. Notice that we already have the verb "are," so one way to read B would be "are not (caused by X) but are are by y." Another way to think about it is that "caused" isn't really a verb here--it's a past participle. It describes where stomach ulcers come from, not what they do. Making it parallel to a simple verb ("are") doesn't work.

If we don't want to put "caused" before the first parallel marker ("not"), as in C, then we need it after each marker: NOT caused by x BUT caused by y. However, in this case there's no reason to use that longer form. C solves the problem much more elegantly.
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Normally, we don't use "and" with lists of negatives, because it's then unclear whether we mean to negate each of the items, or just all of them together as a group. In other words, if I say "I don't have a car and a bicycle," now you don't know whether I have just one of those things or neither of them. If I say "Ulcers are not caused by X, Y, and Z," I seem to be saying that the combination of XYZ does not cause ulcers, whereas I think the intent here is to say that none of those things cause ulcers at all.
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lybeaver The first version doesn't work. If we use the form "not . . . but," it creates a parallel structure. Whatever follows "not" has to match what follows "but." As long as we make our terms parallel, we can contrast as much or as little of a phrase as we want. Consider the following three options, all of which work grammatically, at least in theory:

Ulcers are NOT caused by x BUT caused by y.
Ulcers are caused NOT by x BUT by y. (This form probably strikes the best balance for this particular statement.)
Ulcers are caused by NOT x BUT y. (This doesn't work well, but keep reading.)

Most folks would find the first overly wordy, but it's not wrong, and this kind of form is quite common if the two verbs are different. For instance, we might say "Most great poems are NOT created in a flash inspiration BUT RATHER crafted painstakingly through many hours of revision."

The last form (with just x and y as parallel terms) would probably not fly on the GMAT, simply because "by not x" sounds confusing. It almost seems like we're saying that "not x" caused something. Why do that when we can fix the problem by putting "by" after "not"? However, look at this usage: "I was visited by not one but three members of the team." This makes sense, since "not one but three" is basically just a way to emphasize that three is a large number in this context. While it wouldn't be wrong to say "I was visited not by one but by three members of the team," but it doesn't create the same emphasis.

So, long story short? Start by making sure that whenever we have closed markers (not only/but also, either/or, etc.), the words/phrases after each marker match precisely. Typically, we want the exact same part of speech, although we might have, for instance, a noun in one case and a modified noun in the other. ("I want not only a cookie but also a warm blanket.") Don't automatically cut a choice for repeating too much (e.g. "not caused by X but caused by Y") unless the repetition creates an error. Then, look to make sure that the complete structure works to convey the intended meaning.
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+1 for C

caused not by stress, alcohol, or rich foods, but by- maintains parallelism (not by....but by)