Let's draw our diagram and put K in 2.
_____ <> K <> M
Are there any rules for K?
Rule 3 is that L is either with K or with M.
Rule 4 sometimes forces K and J to be apart or together.
We'd have to either frame a scenario where O is in 2 and one where it isn't,
or frame a scenario where L is with K or L is with M.
No way to know which is better / easier, so just pick one and get to work.
____ <> LK <> M
____ <> K <> LM
Since O and P can't go in area 1, both of these scenarios are challenged when it comes to, "Who's going in 1?"
It looks like the only character left is J.
J <> LK <> M
J <> K <> LM
Since we know that J and K are in different areas, rule 4 tells us that O cannot be in area 2.
What about P? It could still go in area 2 or 3.
.......(.....P.....)
J <> LK <> M
J <> K <> LM
.....~O
(A) Nope, J is definitely in 1.
(B) Same as (A).
(C) L is either 2 or 3.
(D) O can't be 2.
(E) Yup, P can be 2 or 3.
NOTE: by doing this question BEFORE we do Q9, we can easily eliminate A/B/C on Q9, since our work for Q10 shows us that P, L, and O could all go in group 3.