Heidi,
I believe James' response was worded confusingly--he is not saying that (D) is incorrect. What he is saying specifically is that (D) and (A) both undermine the idea that night-lights cause nearsightedness. He is also saying that we are looking to undermine the conclusion that the nearsightedness caused by night-lights disappears with age, as well--which unlike (A), (D) does! This makes (D) the correct answer.
As far as (E) goes, you are correct that it doesn't establish correlation. Just because "several" of the children were nearsighted doesn't mean night-lights were the cause, and we also don't know how many children out of 100 "several" is. If half of the children slept with night lights and 10 of them were nearsighted, is that significant? What if 10 of the children without night-lights were, too? For these reasons, (E) isn't a good answer.
I hope that clears up the confusion!