Pulmonary Fibrosis or Interstitial Lung Disease (not explicitly listed but implied by the symptoms and lung compliance measures): The patient's symptoms of progressive shortness of breath, difficulty walking up stairs, low PaO2 and SpO2 levels, and significantly reduced lung compliance (50% of predicted value) without increased airway resistance are highly suggestive of a restrictive lung disease. Given the options provided, none directly state pulmonary fibrosis or interstitial lung disease, but these conditions would lead to reduced lung compliance.

D. Hypoventilation: Although the respiratory rate is slightly elevated, hypoventilation could contribute to the low oxygen levels, especially if the patient has a condition leading to inadequate ventilation.
E. Pulmonary Edema: This could cause shortness of breath and reduced oxygen saturation. However, it typically presents more acutely and would likely have other associated symptoms such as orthopnea or paroxysmal nocturnal dyspnea.

Pulmonary Embolism (not listed): Although not among the choices, pulmonary embolism is a critical diagnosis to consider in any patient with acute or subacute onset of shortness of breath and hypoxemia. It can present with a wide range of symptoms and can be fatal if not promptly treated.
Cardiac Causes (implied by E. Pulmonary Edema): Conditions like heart failure can lead to pulmonary edema and would need to be considered, especially given the patient's age and symptoms.

A. Asthma: Unlikely given the normal airway resistance measures and the progressive nature of symptoms over a year without mention of episodic worsening or specific asthma symptoms.
B. Emphysema: Typically presents with increased airway resistance and would not primarily cause reduced lung compliance to this extent without significant airway obstruction.
C. Chronic Bronchitis: Similar to emphysema, chronic bronchitis would likely have increased airway resistance and might not solely account for the significant reduction in lung compliance observed.