I would say A or D are acceptable, but A is probably the better answer: firstly, the entropy of the planet system alone is probably not increasing (indeed, it's probably near to constant) and as noted elsewhere, you need to consider a closed system to apply the Second Law, so you need to think about everything that comes to and leaves the Earth. This is the key to understanding why life on Earth doesn't violate the second law: Earth absorbs and re-radiates roughly the same amount of light, but that light's state is radically changed as this happens, and this state change and the huge entropy increase it brings about overwhelmingly offsets the decrease in Earth's organisms' entropy as they build themselve whilst making use of that light.
Let's look at the radiation balance in more detail.
The thermodynamic entropy of a system is basically the system's conditional information content (also known evocatively as equivocation in information theoretic circles) conditioned on the given macroscopic properties of a system. It's the logarithm of the number of ways a system's internal microstates can be arranged consistent with the observed outward properties. A simple explanation of the logarithm is that when you add two systems together, the number of ways that they can be arranged multiplies (think of two car number plate letters: one letter yields 26 different number plates, two letters $26^2$ number plates, three letters $26^3$ number plates, three letters and two digits yields $26^3\times 10^2$ number plates and so forth). So the entropies add when the possibilities multiply.
The entropy of a system of identical particles is proportional to the number of particles in that system. Think of each particle as like a letter in an alphabet of its states and then think of long "number plates" of concatenated particle states.
So now: let's look at the input to the Earth: around about $1{\rm kg}$ of energy in the form of sunlight per second is available to Earth systems to do work. It comes as $\frac{c^2}{h\,\nu}$ photons per second, where $\lambda = \frac{c}{\nu}$ is of the order of 500nm so $\nu\approx600{\rm THz}$. That is, about $2\times 10^{35}$ photons per second.
The energy output of the Earth is basically infrared heat: it's the same amount of energy as comes in, but it is now composed of many more photons, because now $\nu$ in the photon number $\frac{c^2}{h\,\nu}$ is of the order of $30{\rm THz}$ (corresponding to $\lambda=10{\rm \mu\,m}$). The Earth therefore radiates roughly twenty times more photons than it absorbs: about $4\times 10^{36}$ photons per second. Each photon can encode the same amount of information, so the entropy increase is roughly twentyfold. Life systems on Earth use about one thousandth of the incident Solar energy: it has been estimated that photosynthesis fixes energy for use by life systems at the rate of about $100{\rm TW}=10^{14}{\rm J\,s^{-1}}$, compared with an input of $1{\rm kg\,s^{-1}}\approx 10^{17}{\rm J\,s^{-1}}$. So, no matter how complex life organisms get, this barely makes a dint on the massive entropy "production" of the total Earth energy cycle: the nett production of entropy by the whole Earth system is still strongly positive notwithstanding the presence and evolution of life, and therefore in keeping with the Second Law.
An interesting calculation has been done on how much Solar energy is needed to evolve life on Earth to the present day. This is presented in the paper:
Emory F. Bunn, "Evolution and the second law of thermodynamics", Accepted for Publication Amer. J Phys.
Bunn calculates that less than a year of sunlight would be enough to power the evolution of all life on Earth over the last four billion years and still be in keeping with the Second Law.
I should cite where I first saw this idea for explaining the life versus second law problem: I took this line of argument from:
Roger Penrose, "The Road To Reality: A Complete Guide to the Laws of the Universe", 2004 Chapter 27, "The Big Bang and its Thermodynamic Legacy"
but I have heard it used in several lay explanations of physics since.
