The correct option is E to form the mud or clay into bricks, and, after some preliminary air drying or sun drying, to lay them
The error in this sentence occurs in its parallel structure (parallelism or parallel structure is a balance within one or more sentences of similar phrases or clauses that have same grammatical structure. Parallelism, basically, must balance noun with noun, prepositional phrases with prepositional phrases, participles with participles and so on). There are two different actions mentioned in the sentence- the act of forming bricks and the act of laying them. In option A, there's the gerund (noun acting as verb) 'forming' and then there's 'are laid' which is an ordinary verb. Thus, option A does not confirm to the parallel form and is incorrect. Option B, too, doesn't confirm to the parallel structure due to its use of the gerund 'forming' and the infinitive 'to lay' in the same sentence. The passive gerund 'having bricks formed' in C does not fit with the verb 'they were laid'. Thus, C is out of context. Both D and E confirm to the parallel structure of the sentence- in D, we have 'to form' and 'to laid' and in E we have 'were formed' and 'were laid'. However, the 'and' in D connects and balances the parallel structure perfectly whereas the use of 'which' in E is questionable. Thus, D is our correct answer.