This question asks about which numbers can’t go third and fourth. You should look at your diagrams for ideas:

The only numbers restricted from going 3rd are 4 and 3, in scenarios 1 and 2, respectively. So you should only look at the answers that place 4 or 3 in 3rd. That’s D and E. So right away you eliminate three answers.
Next, make a diagram showing how 3 could go 3rd (in scenario 1). This will let us see which of the two answers is possible, and therefore wrong.

If we place 3 3rd, then we need 4 5th, in order to obey rule 4 (5th is bigger than 3rd). Therefore, D is possible.
E is CORRECT. We end up with this order: 12340. But, the last digit is supposed to be bigger than the third.

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