The argument does not presume this, but rather, says that stress causes some cases of insomnia. The argument doesn't assume that insomnia affects stress or ability to cope with stress.

The argument’s evidence is limited to “most cases of insomnia that psychologists treat”. But other cases of insomnia might not be caused by stress. If drugs may be helpful for insomnia that isn't caused by stress, then we have some reason to prescribe sedatives for at least some people with insomnia.

This points out the possibility that drugs might be more effective than psychotherapy for some cases of insomnia. So, there might be some reason to prescribe sedatives for at least some people with insomnia.

This argument assumes that just because stress causes some insomnia cases, drugs shouldn’t be prescribed for them. But, if drugs can reduce stress, then there isn’t a clear reason why doctors should always default to psychotherapy.

Similar to (B), this describes the problem with the argument’s evidence being limited to “most cases of insomnia that psychologists treat”. We’re not told anything about cases not treated by psychologists. It's possible that sedatives would be appropriate for cases of insomnia that aren't treated by psychologists.