Answer:
1. Brian told Joe that he thinks he is a genius.
Explanation:
The revision that would best improve the original sentence is the first one.
In the second sentence, Joe is mentioned twice, which is not necessary and sounds somewhat awkward (despite making it a bit clearer whether Brian thinks that he himself or Joe is a genius).
In the third sentence, Joe is mentioned once, but in the second half of the sentence. That's why we could think that Brian told someone else that Joe is a genius.
The fourth sentence is the second best. The phrase <em>his friend</em>, though, doesn't contribute to the revision in any way, which makes it unnecessary.
That leaves us with the first option is the best one.
