The origin of sacrococcygeal teratomas is yet uncertain. However, the most currently acceptable theory is that they develop along the lines of migration of the primordial germ cells from the yolk sac towards their final destinations in the fetal gonads. During this migration they come to lie in the area of the primitive streak and that's why they are often referred to in USMLE questions as remnants of the primitive streak.
In your question they are trying to confuse us with neural tube closure option to make us think of the primitive streak, but that's not the correct answer. Defective closure of the neural tube results in spina bifida or cephalic midline defects.
I go with option E, as it's the most reasonable answer among all others.