D. The repressor is freed from the operator when lactose is present.
Think of a bacteria that comes into contact with some lactose sugar in milk. Normally it's not in milk, so the gene is repressed (prevented) from making the lac enzyme (which digests lactose). Now when it comes across some milk, it wants to make as much lac as possible to eat up all the lactose.
FYI: trp for tryptophan works the exact opposite with repressor blocking when trp IS PRESENT.
