Explanation

bucolic and cultural

The sentence starts with the trigger word Though, signaling that the two parts of the sentence will be different. Since you know the town is scenically beautiful, the second blank means something else besides its appearance.
Eliminate attractive, and eliminate picaresque because there is no clue that the town refers to an adventure story. Cultural makes the most
sense for the meaning of the second blank.
The first blank describes the scenically beautiful town, and must mean something similar to attractive country as a contrast to the city.
Eliminate sprawling and desolate, neither of which are suggested by the clues. Bucolic, which means pertaining to country pleasantness, is the strongest fit. The best answers are bucolic and cultural.

Hence options C and D are correct!
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The second blank is good with cultural, but the word backwater in the second part of the sentence aroused me with a feeling that answer for first blank is "desolate£". Why does desolate not fit?

The first part clearly states the following

Though she willingly admitted that the ____(i)____ town was scenically beautiful

So it was bucolic which is the only good choice...then she thoughts that indeed the actual town was a regression in comparison with the previous one.

Hope this helps
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The sentence begins with Though, indicating the presence of two contrasting ideas.

The first part of the sentence talks about the town. We need an adjective for the town, which is described as scenically beautiful.Sprawling means spreading out over a large area in an untidy or irregular way. Desolate means lonely and uninhabited. The word bucolic refers to the pleasant aspects of the countryside and country life. Therefore, it is the best option.

The second part of the sentence talks about Christine's feelings about the town. We know that it should express a sentiment opposite to that of the first part of the sentence, because of the though at the beginning of the sentence. Since in the first part of the sentence, the town is praised as scenically beautiful, we must expect a negative comment about the town.

An attractive backwater is a positive comment about the town, so it cannot be the correct choice. A backwater, which is a part of a river in which there is little or no current.

A picaresque backwater does not make sense, because picaresque (not to be confused with picturesque, which means scenic) refers to a fictional work dealing with the adventures of a rough and dishonest but appealing hero.

A cultural backwater is a place that exists in a state of cultural backwardness. It expresses a feeling opposite to that of "scenically beautiful".

Though the town was scenically beautiful, it was a cultural backwater.
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