Consider the following exercise from Just/Weese:

My first reaction was "Of course $E$ has to be strictly wellfounded otherwise it wouldn't model $\in$" but apparently I am missing something since I don't see why I should use Theorem 2.2:

Also, the exercise is rated "difficult" -- so: what is the correct answer? Thanks for your help!
This is basically fleshing out some ideas from Brian's comment. (But I must admit that I forget exactly where things are introduced in Just-Weese.)
The ZFC counterpart to "$\in$ is strictly wellfounded" is the Axiom of Foundation (or Regularity), expressed as follows: $$( \forall x ) ( x \neq \varnothing \rightarrow ( \exists z ) ( z \in x \wedge z \cap x = \emptyset ) ).$$ This says that every nonempty set $x$ has an element $z$ disjoint from it (and therefore there is no element of $x$ which is below $z$ in the $\in$-order).
Therefore, using the correspondence between elements of $M$ and (certain) subsets of $M$ (as described in a previous question) we see that given any $a \in M$ the subset $$\{ b \in M : b \mathrel{E} a \}$$ has an $E$-minimal element.
However, as noted in that previous question, not all subsets of $M$ correspond to elements of $M$, and you cannot use the fact that $\langle M, E \rangle$ satisfies the Axiom of Foundation to say that those subsets which do not correspond to elements of $M$ have $E$-minimal elements.
Indeed, introduce to the language of set theory countably many new constants $c_0 , c_1 , \ldots$, and add to ZFC all sentences of the form $c_{n+1} \in c_n$ to get a new theory $T$. Now proceed as follows:
(I'll leave the details for you.)