$500$ is a three digit number so possible numbers below $500$ can be $1$ digit, $2$ digit, and $3$ digit numbers above $100$ and less than $500$
However not all the numbers are included only those numbers that are formed by use of $1,2,3$ and $5$

Three digit numbers:
There are three places for three digit numbers Hundreds, tens and unit so
for the hundreds place except $5$ all given number can be placed so there are $3$ possibilities
for the tens place there are $4$ possibilities and
for ones place there are $4$ possibilities too
in total $3*4*4 = 48$

For $2$ digits:
there are $4$ possibilities for tens place and $4$ possibilities for units place
therefore, $4*4 = 16$

For $1$ digit there is $4$ possibility
Therefore total possibility = $48+ 16 + 4 = 68$
option D