Step 1: Understanding the Concept:
Recombinant vector engineering: shuttle vectors replicate in two phylogenetically distinct host organisms, and phagemids combine plasmid and filamentous phage origins.
Step 2: Detailed Explanation:
1. Statement I: Shuttle Vectors are recombinant plasmid vectors genetically engineered with two distinct replication origins and selectable markers, allowing them to replicate and be maintained in two completely different host organisms (e.g., E. coli and Saccharomyces cerevisiae yeast, or E. coli and mammalian cells), not 'ONLY in E. coli'. Hence, Statement I is incorrect.
2. Statement II: Phagemids (e.g., pBluescript) are dual-origin cloning vectors containing both a standard double-stranded bacterial plasmid origin of replication (e.g., ColE1 pUC ori) and a single-stranded filamentous bacteriophage origin (e.g., M13 f1 ori). Hence, Statement II is correct.
Step 3: Final Answer:
Therefore, Statement I is incorrect but Statement II is correct, corresponding to option (D).