There are 3 start codons, so knocking one out won't stop the gene from translating. (I do wonder if you misstyped some information from the passage, and if there are really 2 start codons pre-s1 and pre-s2, and S is simply the gene - otherwise the answer options don't make sense, early vs late in S for example).
One "reading frame" is from a start codon to the next stop codon. It is broken into a series of nucleotide triplets which code for their respective amino acids, or start/stop. In some genomes, reading frames can overlap (more often in viral, prokaryotic, or bacterial/mitochondrial genomes). In this question's example, it is viral DNA with what seems to be 3 (2?) overlapping reading frames starting at pre-s1, pre-s2 and terminating at the stop codon. As was discussed above, knocking one out may or may not affect the function of gene S - but a frameshift mutation certainly will.
However, thinking of these reading frames is likely spending too long on this question. I simply looked at:
A - missense in 1 start codon, gene could still be fine since the other start codon is present.
B - stop codon late in gene S, gene is mostly translated so may still function.
C - insertion of a single nucleotide, whole thing will be off.
D - deletion, but it's 3 nucleotides so reading frame isn't shifted.
C it is.