EXAMPLE : living in a freestanding house ...

According to a recent poll, owning and living in a freestanding house on its own land is still a goal of a majority of young adults,/.../

B. as that for earlier generations

E. as it was of earlier generations

"It" correctly refers to "goal" ! E is best.

Notes

notes-it-vs-that

EXAMPLE : Quetzalcoatlus ...

A huge flying reptile that died out with the dinosaurs some 65 million years ago, the Quetzalcoatlus had a wingspan of 36 feet, believed to be the largest flying creature the world has ever seen.

(A) believed to be

(B) and that is believed to be

(C) and it is believed to have been

A : 'believed to be' seems to modify wingspan and not Quetzalcoatlus.

B vs C

B is using a pointing pronoun to point Quetzalcoatlus which is never preferred on GMAT.

Note:

notes-it-vs-that

NOTES : EACH before/after plural nouns

each of the three channels broadcasts ......

three channels each broadcast ......

NOTES : It VS THAT

If "it" and "that" are used as a pronoun, how do I choose between them? For example,

The dictionary is very helpful; without it, I don't know what the word means at all.
The dictionary is very helpful; without that, I don't know what the word means at all.

On the gmat, and in formal written english in general, you can't use the so-called 'pointing words.' those are the four words 'this', 'that', 'these', and 'those', used by themselves as pronouns. big fat no-no. the second one of these two sentences is, therefore, incorrect. -- the above is of course not meant to say that those four words are forbidden in general. you can, of course, use 'this', 'that', 'these', and 'those' as adjectives (these people, that book, etc.), or in specialized constructions wherein parallelism lends them meaning (such as 'beethoven's symphonies were more revolutionary than were those of bach').

Examples:
example-quetzalcoatlus
example-living-in-freestanding-house