Deserts are inhabited with several distinct animal species

[Sage Pearce-Higgins]

You're welcome. Yes, the phrase 'each with ...' is a modifier, i.e. it's giving some extra information about another item in the sentence. In this case, we're getting some extra information about the animal species referred to in the earlier part of the sentence. What makes this a tricky problem is that it's not the kind of construction that we're likely to use in informal English. However, try making up a couple of examples of similar 'each...' modifiers.

[JbhB682]

Lets say in this desert : there are 2 types of animals species - camels and cats

Now, within the camel family, there are 3 distinct sub-species
(i) Dromedary Camel
(ii) Bactrian Camel
(iii) Wild Camel

And

there are 4 different sub-species within the cat family
(i) Sand cat
(ii) Bengal cat
(iii) Sphynx cat
(iv) Persian cat

[JbhB682]

I believe (B) captures my above scenario better than (C) does

- in (B) - the adverb (distinctly) MAKES logical sense with several

Several in my case is -- 2 animal species (the camel and the cat)

Distinctly is showcasing that -- within the 2 animals species (the camel and the cat) -- there are sub-groups (3 in the case of the camel and 4 in the case of the cat)

[JbhB682]

Alternatively - i thought (C) was wrong

In (C) -- several and distinct are BOTH modifying the noun : animal species is redundant

For example - if you have distinct animal species -- by definition - you have several animal species (more than 1 at least)

You dont need the adjective : several if you already using the adjective distinct

[Whit Garner]

I believe (B) captures my above scenario better than (C) does

- in (B) - the adverb (distinctly) MAKES logical sense with several

Several in my case is -- 2 animal species (the camel and the cat)

Distinctly is showcasing that -- within the 2 animals species (the camel and the cat) -- there are sub-groups (3 in the case of the camel and 4 in the case of the cat)

Alternatively - i thought (C) was wrong

In (C) -- several and distinct are BOTH modifying the noun : animal species is redundant

For example - if you have distinct animal species -- by definition - you have several animal species (more than 1 at least)

You dont need the adjective : several if you already using the adjective distinct

I love the examples! Let's start with (B). "Distinctly" is an adverb, and therefore can modify a verb, a clause, or another descriptor. In choice (B) it seems to be modifying the descriptor "several." However, something cannot be "distinctly several" - at least not in standard English usage (it's not clear how one thing could be distinctly many things). The most common usage of "distinctly" as an adverb modifying another modifier would be "distinctly different." Otherwise, you're much more likely to see "distinctly" modifying a verb ("I could hear him distinctly" or "The sommelier could distinctly detect the aroma of chocolate in the wine.") Therefore, choice (B) fails for meaning.

For all of the other choices, the use of "distinct" with "several" isn't actually redundant, it's an additional qualifier. We could say "several species" but it isn't just that there are several species, but that those several are all "distinct." I'll also note that when all of the answers in an official question use the same construction (even if it seems like it might be redundant), then we're stuck with it. I've certainly seen some sentences where I didn't love the use of a pronoun because it seemed to be ambiguous, but they used the construction in all 3 of the right answers that hadn't failed because of subject-verb agreement, so I was stuck with it!

Hope this helps!