Nice work on selecting "invalid" as the correct answer.
The reason why this argument is invalid is because the 'x' could be in circle B or could be outside circle B. There's simply not enough information.
The venn diagram would either be (A) or (D).
The only information we know is that Fred is does not live in San Francisco, so the 'x' will not be placed inside circle A.
Ignore any diagram where x is on the edge of a circle. That isn't allowed in venn diagrams because a person is either in San Francisco, or they aren't (same goes with California). We can't have blurry boundaries like that. This means venn diagrams (B) and (C) are nonsensical.