The word that goes in the blank is a verb, describing what he does with the tail of the kite, and "undo all the tangles near the tassel" hints to the reader what the correct answer should be. Unfolded supports the idea of "being very particular to undo all the tangles near the tassel." Uncrease, or "get rid of lines, folds, or wrinkles" is appropriate to "undo all the tangles." (B) and (E) are correct.