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Implementing and Operating Cisco Enterprise Network Core Technologies (ENCOR) · Cisco
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When aaa is enabled the default authentication list is automatically applied on all Console and VTY lines; unless a named list is explicitly defined on that given line. For named lists to be effective, they must be explicitly configured on the desired console and VTY line. In option A, the named list is ineffective, why? because we should explicitly configure it on the VTY lines (0-4) using the 'login authentication telnet' command under VTY line config - "telnet" is the aaa_list_name Therefore, the answer is D.
I'm pretty sure the answer is D. The aaa auth line is OK, it uses default autentication list with tacacs and for fallback method none. aaa new-model overdides password line form vty section so we can ignore it.
The fault with your lab is that you used a name for the AAA Authentication but did not apply the AAA authentication name to the VTY so it resorted to 'default' You need to use 'default' in the AAA authentication. aaa authentication login default group tacacs+ none rather than aaa authentication login test_0 group tacacs+ none