The answer is d. relative
The Participial phrase is destroyed by fire, and the word modified is house. This is an example of participial phrase servings as an adjective modifying the word house. This could also be reworded into. Destroyed by fire, the neighbors found their house.
I haven't read the outsiders in like 2 years but I do remember Pony boy and his friend (I forgot sorry) were wanted for murder so they ran away and hid in an abandoned church for a while but that's only one of the major problems I remember from the book