The method you posted seems to me to be a bit too contrived and lengthy, though it may work for some people. On the GMAT, it may be better to test cases and visualize possibilities rather than perform too much of algebra that you would be prone to make errors in under a time crunch. The following method may seem pretty contrived too, but in fact it's quite intuitive - you just need to test obvious cases. This approach will work for most DS questions and is something you can rely on for test-day.
x^4 + y^4
1. (x - y) R 5 = 1
i.e. x - y is some number ending in 1 or 6.
There are various values of x and y that could yield such numbers, and would thus yield various different values of x^4 + y^4
INSUFFICIENT
2. (x + y) R 5 = 2
i.e. x + y is some number ending in 2 or 7.
There are various values of x and y that could yield such numbers, and would thus yield various different values of x^4 + y^4
INSUFFICIENT
Both 1 and 2:
x + y is a number ending in 2 or 7 and x - y is a number ending in 1 or 6, i.e. there are 4 combinations we need to test to see if they are possible. i.e. (x+y, x-y) are numbers ending in (2,1) (2,6) (7,1) or (7,6). It shouldn't be too tough to come up with the following examples:
19 + 13 = 32 and 19 - 13 = 6 ... satisfies (2,6)
14 + 13 = 27 and 14 - 13 = 1 ... satisfies (7,1)
19 + 18 = 37 and 19 - 18 = 1 ... satisfies (7,1)
The other 2 cases of (2,1) and (7,6) are evidently contradictory (you won't be able to find two numbers that satisfy it) and are thus not possible. Now let's test our stem for the 3 possible examples:
1. 19^4 is a number ending in 1, and 13^4 is a number ending in 1 => the sum is a number ending in 2... remainder when divided by 5 will also be 2.
2. 14^4 is a number ending in 6, and 13^4 is a number ending in 1 => the sum is a number ending in 7 ... remainder when divided by 5 will be 2.
3. 19^4 is a number ending in 1 and 18^4 is a number ending in 6 => the sum is a number ending in 7 ... remainder when divided by 5 will be 2.
Three solid cases are usually sufficient on the GMAT and this is a safe bet.
SUFFICIENT
Pick C.