Hello Everyone!
Let’s tackle this question, one problem at a time, to narrow it down to the right answer!
After a quick scan of each answer, there are a few major differences between each answer. Let's tackle them one at a time, and we will come to the correct answer quickly!
You may already be familiar with the rule that you shouldn't end questions with a preposition. Did you know that also applies to other sentences and clauses too? Take a closer look at each answer, and find any sentences or clauses that end with a preposition:
(A) To estimate the expansion rate of the universe is a notoriously difficult problem because there is a lack of a single yardstick that all distances can be measured
by. -->
WRONG(B) Estimating the expansion rate of the universe is a notoriously difficult problem because there is no single yardstick by which all distances can be measured. ->
OK(C) Because there is a lack of a single yardstick to measure all distances
by, estimating the expansion rate of the universe is a notoriously difficult problem. -->
WRONG(D) A notoriously difficult problem is to estimate the expansion rate of the universe because a single yardstick is lacking by which all distances can be measured. -->
OK(E) It is a notoriously difficult problem to estimate the expansion rate of the universe because by no single yardstick can all distances be measured. -->
OKThere you go - we can bump off answers A and C because they both have clauses that end in prepositions, which is a major no-no in English!
Now that we're left with B, D, and E, let's take a closer look at intended meaning. Focus on finding the most clear and concise answer possible:
(B) Estimating the expansion rate of the universe is a notoriously difficult problem because
there is no single yardstick by which all distances can be measured.
This is
CORRECT! Everything is clear and concise. The structure of the sentence is clear (X is a problem because Y), and each phrase is cut down to only the most important words to convey meaning.
(D) A notoriously difficult problem is to estimate the expansion rate of the universe because
a single yardstick is lacking by which all distances can be measured.
This is
INCORRECT because it's overly wordy and potentially confusing to readers. By saying "A problem is X because Y" puts the focus on the word "problem," and not the actual problem at hand. Also, the phrase "a single yardstick is lacking" sounds awkward, and might lead readers to think there IS a yardstick to measure distance, but that it's flawed in some way. Saying "there is no single yardstick" would be clearer and more concise for readers.
(E) It is a notoriously difficult problem to estimate the expansion rate of the universe because
by no single yardstick can all distances be measured.
This is
INCORRECT because the phrase "by no single yardstick" changes the meaning! Instead of meaning there is no one method to measure distance that exists, this means that all distance cannot be measured by one literal yardstick alone. Of course all distance cannot be measured by one little yardstick - who is going to take it deep into space and use it?

That's not the intended meaning at all, so this is wrong. It also uses the structure "It is a problem to X because Y," which changes the focus from the actual problem (estimating the expansion rate of the universe) to some mysterious "It." There is no need for this extra "it" to be here - just tell us what the problem is and get on with it!
Don’t study for the GMAT. Train for it.