There’s a mismatch here between the premises and the conclusion – the premises tell us that the people on the low-carb diet lost more weight than the other group; the conclusion tells us that the relationship is between the diet and body fat. In other words, there’s an assumption being made that a less weight equates to less body fat.
(A) weakens the argument by giving us a reason to think it’s wrong to equate weight with body fat. If (A) is true, then the fact that the high-carb diet people didn’t lose much weight doesn’t mean that they didn’t lose much body fat. They could have lost just as much body fat as the other group; it’s just that they retained water, and so the loss of body fat didn’t bring with it a loss of weight.