
Ed M. answered 09/02/15
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I don't think there's any grammatical "error" anywhere in those two sentences (though I believe current usage would require multi talented to be written as a single word or at least a hyphen placed between multi and talented) . The problem may just be rhetorical and stylistic, i.e., if after that first mention of "Iceland" you continue with "a frigid, almost barren island . . ." where the reference is clearly to Iceland, you would seem to be making an appositive phrase out of the whole a frigid, almost barren island in the North Sea. By "appositive" I mean placing a word or phrase directly after another word or phrase either to describe or to identify the first, e.g., Björk, the most overrated singer in history where the phrase the most overrated singer in history is obviously (independent of your musical tastes) meant to refer to Björk. And notice that as per standard practice I put a comma between Björk and the beginning of the appositive phrase, this comma representing the pause in speech that we would typically hear in this case.
So if we do something similar in your example, we'd have
Bjork is a multi talented [sic] artist from Iceland, a frigid, almost barren island in the North Sea. Iceland would seem an unlikely place for an electric rock star and avant-garde actress to develop her craft.
where we now make the last word of the first sentence Sea, dutifully stick a period after it and then begin a new sentence with the second occurrence of Iceland. I think too that in terms of information processing, this new arrangement of ideas is acceptable if not even preferable because after reading "a frigid, almost barren island in the North Sea" to describe Iceland, one would indeed think, as the second sentence in fact says, that "Iceland would seem an unlikely place for an electric rock star and avant-garde actress to develop her craft," so we would now expect a little more about Björk and how she became what she did from such an environment to come in the following sentences.
Therefore, I guess this question might be pointing to choice A., i.e., "Iceland, a" as the correct answer here, but again I maintain that there's really no grammar error involved with it.