Final answer:
The policy that is likely to create the most tension between the competing values of rule of law and limited government is seizing library records to investigate potential terrorists. Therefore, the correct option is D.
Step-by-step explanation:
The policy that is likely to create the most tension between the competing values of rule of law and limited government is option D, which involves seizing library records to investigate potential terrorists. This policy raises concerns about privacy rights and the potential for government overreach in the name of national security.
It may conflict with the principle of limited government, as it grants the government significant power to gather information without sufficient checks and balances.