During the past decade, the labor market in France has not been operating according to free market principles, but instead stifling functioning through its various government regulations restricting the hiring and firing of workers.
A)principles, but instead stifling functioning through its various government regulations restricting the hiring and firing of workers
B)principles, instead it has been functioning in a stifled manner as a result of various government regulations that restrict the hiring and firing of workers
C)principles, rather functioning despite being stifled as a result of government regulations that variously restrict worker hiring and firing
D)principles; the hiring and firing of workers is restricted there by various government regulations, its functioning being stifled
E)principles; instead, its functioning has been stifled by various government regulations restricting the hiring and firing of workers

What is the best way to attack such questions in the least time possible. In the given question I couldn't find any obvious mistakes, pronouns,modifiers etc but definitely knew the grammatical construction was wrong. Scanning the choices vertically doesn't help here. And Reading each choice horizontally took me 1:44 minutes to solve this question.

A: But and INstead can not be used together.
B:Contender
C: rather functioning despite eing...has changed the intent.
D: Its functioning being stifled is awkward construction.
E: ISprecise and shorter than B. therefore I go for E.

the only two contenders i found to said question is B and E

"Instead" acts as a preposition hence cannot be connector of two clauses and u require ":" which is there in E

hence E

Is the use of "is" correct here isn't it a compound subject or the use of "the" makes it singular

"X and Y" can be either singular or plural, depending on whether X and Y are viewed as two separate entities or as a single unit/package.

they won't normally require you to make this decision; there will be other clues present in the sentence.
for instance, in the example you've cited, the singular verb "is" demonstrates that "hiring and firing" is to be considered a single task, and should therefore take a singular verb.

for an official example (i can't transcribe it here), see:
#73 in the 11th OG
or
#82 in the 12th OG (same problem)

1:44 is not unreasonable. you should set a goal of 1:30 for all but the longest, most obnoxious SC's (for which you may take up to two minutes); however, going over that goal by a few seconds is acceptable.
as you practice more, you should find that your time goes down for problems like this one.

note that you should be able to solve short SC's in under a minute; that's where you'll get some of your time back.

also - "vertical scanning" is helpful for many problems, but certainly not all of them. take a look through your OG; the same will be true there.