D - yes. Actually I find no problem with C either, but it is a less common thing to say. A & B are wrong, as you guessed: The tense is wrong.

C is correct because the speaker expresses the most probability of the person's being at home.The speaker knows the regular habbit of the person.

Thanks Mark, neither can I think of an example that uses "should." Now I know what Christopher and you are trying to tell me. "would" here is not to be interpreted as past tense, it only conveys a less definite mood for the present. But I find it hard to distinguish between "less definite (would)" and "speculative (can)" conceptually. They are so similar in meaning that I can't put my words to pen to tell them apart. Can I say "can" speculates more than does "would"?

"Can" could work in this sentence as the answer to a question. For example: Could he be a work already? He left home more than an hour ago. He can be at work by now. In this case "must" in definite; "would" is less definite; and, "can" is speculative. I don't know of a case where "shall" would fit; but, "should" or "could" are also possible answers.

Thanks Christopher, I guess most grammar questions for exams have an intended answer. It seems that English is a very flexible language and I heard most great writers take advantage of such flexibility. Thanks for providing special cases where other choices might work. :)