B) is the right answer
OK lets say 501 luggages go through. 6 of them get alerted. 5 that have no explosives and 1 that has explosives.
"the scanner will erroneously alert the operator for only one percent of the pieces of luggage that contains no explosives"
this is true 500 contained no explosives and 5 of those were alerted.
"Thus in ninety nine out of hundred alerts explosives will actually be present."
this is false, 6 were alerted with only 1 actually having explosives. 1 out of 6 is a far cry from 99 out of 100.
The correct conclusion would be; "99 out of 100 luggages without explosives will not be alerted."
So the arguement incorrectly substitutes one group for a different group in the statement of percentage.