Which of the following is the most suitable method for removing the traces of water from ethanol?

 Ethanol's remaining water traces are eliminated by interacting with magnesium metal.

The Chemical process is as follows:

${\mathrm{C}}_2{\mathrm{H}}_5\mathrm{OH}$reacts with $\mathrm{Mg}$ to form:

$2{\mathrm{C}}_2{\mathrm{H}}_5\mathrm{OH} + \mathrm{Mg}\to {\left({\mathrm{C}}_2{\mathrm{H}}_5\mathrm{O}\right)}_2\mathrm{Mg} + {\mathrm{H}}_2$

When ${\left({\mathrm{C}}_2{\mathrm{H}}_5\mathrm{O}\right)}_2\mathrm{Mg}$ reacts with water then, ethanol can be obtained again.

 ${\left({\mathrm{C}}_2{\mathrm{H}}_5\mathrm{O}\right)}_2\mathrm{Mg}+2{\mathrm{H}}_2\mathrm{O}\to \mathrm{M}{\mathrm{g}\left(\mathrm{OH}\right)}_2+2{\mathrm{C}}_2{\mathrm{H}}_5\mathrm{OH}$

Hence, the correct option (D). Reacting with $\mathrm{Mg}$.