A -
If we remove the intervening non-essential modifier, the sentence we get is this -
"The 1996 Mid-sea Continent Journalist Tea Party Award winner
reporting favorable news" -
Here, "reporting favorable news" serves as a modifier to "tea party award winner", not as an action/verb.
this implies that there is a "specific" kind of "the 1996 Mid-sea continent journalist tea party award winner".
"South-eastern Xanadu
which is a very rich country in a very rich continent"
"which" must be preceded by commas.
"this seriously calls into question the criteria ..."
"this" cannot refer to an entire clause.
B -
"Xanadu government
donating huge and often scandalous sums of money"
this implies that there is a "specific" kind of Xanadu government, one that donates huge sums of money.
"...reporting of favorable news
depends ...
calls into question the criteria ..."
two verbs in the main clause.
C -
"Journalist Tea Party Award
winner's, Xanam Television Station..."
"Xanam television station" cannot refer to the possessive noun "winner's".
D -
"criteria used ... at recognizing television stations ..." is unidiomatic.
E -
seems to fix other errors.
"Tea Party Award winner's reporting ..." Note that "reporting" is preceded by a possessive noun. And here too -
"... Xanadu government's donating huge and often scandalous sums of money ..."