With the 1957 publication of his novel, Jose *Donoso’s contribution was enormous* to the development of the modern Latin American novel.

Why is the original wrong? It uses less words.

Why is E) Donoso made an enormous contribution a better answer?

Using fewer words should be a goal, but a secondary goal. You should only care about that if there are no other issues in the two choices you’re comparing. In this case, there is another issue: “Jose Donoso,” not “Jose Donoso’s contribution” should come after the comma. “Jose Donoso’s contribution” didn’t write the novel, “Jose Donoso” did.