1. Yes, we are constructing _one_ function on $A$, but _separately_ on $D$ and (two parts of) $E$.
Starting from the given example, $f(A)=D\cup\\{a_2,a_3,\dots\\}\cup\\{b_2,b_3,\dots\\}\cup \dots$, assume specifically that $C=f(A)\cup\\{b_1,c_1\\}$.
Then set $g(x)=x$ if $x\in D$,
$g(x)=x$ if $x\in \\{b_1,b_2,\dots,\,c_1,c_2,\dots\\}$,
and $g(x)=f(x)$ otherwise (so that if $x\in \\{a_1,a_2,\dots,\,d_1,d_2,\dots,\dots\\}$).
2. Yes, it is a typo.