44 LR One Question 24
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Comments

How about (D)?
I thought the claim that dream content varies enormously is an evidence for the author’s conclusion.
Thus, I choose (D).
Further, when I read the passage with recognition of the ascriptive error, I thought the author’s conclusion would be that dreams reveal something about the character of dreamer. However, the author’s real conclusion looks similar to some psychologists’ conclusion, or have no relation to some psychologists’ conclusion.

You had it structurally correct; because of the ascription, we can be sure the author's conclusion opposes the ascribed position. Here, some people argue that dreams must be understood purely physiologically, which the author concludes is false.
(D) is wrong because the author makes no claim about the difficulty of explaining dreaming.