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Despite the fact that they form the fifth largest desert of the world, the Gobi dunes are neither sandy nor are they hot.

A) Despite the fact that they form the fifth largest desert of the world, the Gobi dunes are neither sandy nor are they hot.

B) Forming the fifth largest desert of the world, the Gobi dunes are neither sandy nor hot.
Grammar is fine but contrast is missing

C) Although the Gobi dunes form the fifth largest desert of the world, they are neither sandy nor are they hot.

D) Despite forming the fifth largest desert of the world, the Gobi dunes are neither sandy nor are hot.

E) Although they form the fifth largest desert of the world, the Gobi dunes are neither sandy nor hot.
Although <Clause1>, <Clause2>

The first part acts as subordinate clause to clause2 and connects well with the contrast that is needed per meaning.
A, C and D are out because of glaring parallelism issues

I choose (E) :fingers_crossed:
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In Neither X Nor Y - X and Y need to be parallel.
Choices A, C and D violate this parallelism and hence they can be eliminated.

Choice B : Forming the fifth largest desert of the world, the Gobi dunes are neither sandy nor hot.

Is the fact that the Gobi dunes are neither sandy not hot related to the fact that they form the largest desert of the world?

No, the two facts are independent and can't be connected with participle modifier phrase (neither in the beginning nor at the end of the sentence).

The choice E brings a contrast. The author expects that if the dunes are not sandy and hot, they are not supposed to form the fifth largest desert. However, they do.

E
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Correct option : E

Eliminate A, C, and D - for wrong usage of Neither X nor Y idiom for comparasion, which demean the parallelism structure.
A) Despite the fact that they form the fifth largest desert of the world, the Gobi dunes are neither sandy nor are they hot.
C) Although the Gobi dunes form the fifth largest desert of the world, they are neither sandy nor are they hot.
D) Despite forming the fifth largest desert of the world, the Gobi dunes are neither sandy nor are hot

Elimiate B:
usage of word "forming" is present particple, indicates as if it is currently making 5th largest desert, demean the intended meaning of the sentece, sentence before comma and after comma, structure has to be contrast, which is missing with option B.
B) Forming the fifth largest desert of the world, the Gobi dunes are neither sandy nor hot.

Correct option E
E) Although they form the fifth largest desert of the world, the Gobi dunes are neither sandy nor hot.
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A) Despite the fact that they form the fifth largest desert of the world, the Gobi dunes are neither sandy nor are they hot.
"are they" usage is unnecessary and breaks the parallel rule with "neither...nor". Eliminate

B) Forming the fifth largest desert of the world, the Gobi dunes are neither sandy nor hot.
Grammatically correct, but missing the contrast presented in original sentence. Eliminate.

C) Although the Gobi dunes form the fifth largest desert of the world, they are neither sandy nor are they hot.
"are they" usage is unnecessary and breaks the parallel rule with "neither...nor". Eliminate

D) Despite forming the fifth largest desert of the world, the Gobi dunes are neither sandy nor are hot.
"are" usage is unnecessary and breaks the parallel rule with "neither...nor". Eliminate

E) Although they form the fifth largest desert of the world, the Gobi dunes are neither sandy nor hot.
Contrast is correct, parallel rule is correct & pronoun usage is also correct. So, E is the answer choice.
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POE:

A: Parallelism lost in the structure “Neither X nor Y”: Adjective (=sandy) AND clause (=are they hot)

B: Contender:
1) There is no issue with parallelism, but CONTRAST from original choice is lost
2) Present participle (=forming…) will indicate CONTINUOUS action in time frame of main clause, rendering illogical meaning

C: same as A

D: Parallelism lost in the structure “Neither X nor Y”: Adjective (=sandy) AND verb (=are hot)

E: Correct
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Despite the fact that they form the fifth largest desert of the world, the Gobi dunes are neither sandy nor are they hot.

A) Despite the fact that they form the fifth largest desert of the world, the Gobi dunes are neither sandy nor are they hot. Incorrect

............. neither sandy nor are they hot - parallelism problem

B) Forming the fifth largest desert of the world, the Gobi dunes are neither sandy nor hot. Incorrect

there is no comparison or contrast in this choice

C) Although the Gobi dunes form the fifth largest desert of the world, they are neither sandy nor are they hot. Incorrect

............. neither sandy nor are they hot - parallelism problem

D) Despite forming the fifth largest desert of the world, the Gobi dunes are neither sandy nor are hot. Incorrect

............. neither sandy nor are hot - parallelism problem

E) Although they form the fifth largest desert of the world, the Gobi dunes are neither sandy nor hot. Correct
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