There are at least three people in the room. At most two people in the

Rule#1: There are at least three people in the room. (Room has >=3people)
Rule#2: At most two people in the room recognize each other. (Max 2 people recognize each other)
Rule#3: At least one person in the room recognizes everybody else in the room. (>= 1 person recog. everyone else)

(A) Four people are in the room.
Consistent. This does not violate any rule above.
(B) No two people in the room recognize each other.
Consistent. Relates to the Rule #2. Rule says that at max. there can be 2 people who recognize each other and at the minimum there can be 0 people. Here 0 people recognize each other. Hence consistent.
(C) At most one person in the room recognizes everybody else in the room.
Consistent. Rule #3. Answer can be >= 1. Here it is 1.
(D) Anyone in the room who recognizes any other person in the room is also recognized by that person.
Not consistent. Violates Rule #2. Because of the number of people in the room is 3, then all the 3 recognize each other. And this is more than 2 people. Hence not consistent.
(E) Two people in the room recognize every one else in the room.
Consistent. Based on Rule #3. (>= 1 person)