The correct option is
C I/he
The verbs in the given sentence are in the past tense.
In the first blank any one of the subjective pronouns can be placed.
If we take a look at the second part of the given sentence, we notice that there is an objective pronoun 'it' placed in place of the object 'book'. The second part of the given sentence requires a subjective pronoun.
'Me', 'Her', 'Them' are all objective pronouns.
The only subjective pronoun in the second option is 'he'.
Thus option B is the correct answer. Options A,C,D,E are incorrect. Hence, the complete sentence must be-
I read the book and he took it to the library.