For the best extraction of the flavor of saffron threads, it should be soaked in liquid after being pounded with a mortar and pestle.

A) Same
B) To best extract their flavor, saffron threads should be soaked in liquid after pounding
C) The best way to extract the flavor from saffron threads is soaking them in liquid after being pounded
D) The best way to extract the flavor from saffron threads is to soak them in liquid after pounding them
E) The flavor of saffron threads can best be extracted by soaking it in liquid after pounding it.

D is the correct answer.

My thoughts -

The original sentence has a problem of incorrect pronoun reference. ‘It’ (singular pronoun) refers back to ‘threads’ (plural noun).

B. ‘best extract’ is incorrect grammatically. ‘best’ (adjective) should modify a noun.
C. ‘after being pounded’ is too wordy.
D. Corrects other errors. Hence is the best choice.
E. ‘It’ refers to plural noun threads and in passive voice.

Can anyone/instructors shed some more light on this one? Am I on track here?

Thanks

You are on track with D and E.

A: You have correctly identified the most fatal issue here (singular/plural disagreement). There is also a major issue with wordiness.
B: The principal error here is the misplaced modifier: 'to best extract their flavor' mistakenly refers to saffron threads, leading to the absurd conclusion that they are extracting their own flavor.
C: You are right to be suspicious of the word 'being.' The principal error here, though, is lack of parallelism: since the first half is 'soaking them in liquid', the second half should be 'pounding them with...'.