This is my textbook problem. I solved it with three methods:
A) By rationalising the denominator {WRONG}
B) By writing it as (denominator)^-1 and using the power rule {RIGHT}
C) By using the quotient rule {RIGHT}
I also verified it using online derivative calculators. And it turns out A is incorrect.
Can someone explain what the error is, in the work shown below, using method A?

There is no error when you rationalized the denominator before taking the derivative. Instead, it's just that it's expressed in a different form. For example, with your second method, i.e.,
This can be written as
$$f(x) = \left(\sqrt{x + 1} - \sqrt{x - 1}\right)^{-1} \tag{1}\label{eq1A}$$
so you then have
$$\begin{equation}\begin{aligned} f'(x) & = -\left(\sqrt{x + 1} - \sqrt{x - 1}\right)^{-2}\left(\frac{1}{2\sqrt{x + 1}} - \frac{1}{2\sqrt{x - 1}}\right) \\ & = \left(\frac{1}{2}\right)\left(\frac{1}{\left(\sqrt{x + 1} - \sqrt{x - 1}\right)^2}\right)\left(\frac{1}{\sqrt{x - 1}} - \frac{1}{\sqrt{x + 1}}\right) \\ & = \left(\frac{1}{2}\right)\left(\frac{1}{\left(\sqrt{x + 1} - \sqrt{x - 1}\right)^2}\right)\left(\frac{\sqrt{x+1} - \sqrt{x - 1}}{\sqrt{x - 1}\sqrt{x + 1}}\right) \\ & = \left(\frac{1}{2}\right)\left(\frac{1}{\sqrt{x + 1} - \sqrt{x - 1}}\right)\left(\frac{1}{\sqrt{x - 1}\sqrt{x + 1}}\right) \\ & = \left(\frac{1}{2}\right)\left(\frac{1}{\sqrt{x - 1}\sqrt{x + 1}}\right)\left(\frac{1}{\sqrt{x + 1} - \sqrt{x - 1}}\right)\left(\frac{\sqrt{x + 1} + \sqrt{x - 1}}{\sqrt{x + 1} + \sqrt{x - 1}}\right) \\ & = \left(\frac{1}{2}\right)\left(\frac{1}{\sqrt{x - 1}\sqrt{x + 1}}\right)\left(\frac{\sqrt{x + 1} + \sqrt{x - 1}}{(x + 1) - (x - 1)}\right) \\ & = \left(\frac{1}{4}\right)\left(\frac{\sqrt{x + 1} + \sqrt{x - 1}}{\sqrt{x - 1}\sqrt{x + 1}}\right) \\ & = \left(\frac{1}{4}\right)\left(\frac{\sqrt{x + 1}}{\sqrt{x - 1}\sqrt{x + 1}} + \frac{\sqrt{x - 1}}{\sqrt{x - 1}\sqrt{x + 1}}\right) \\ & = \left(\frac{1}{4}\right)\left(\frac{1}{\sqrt{x-1}} + \frac{1}{\sqrt{x+1}}\right) \end{aligned}\end{equation}\tag{2}\label{eq2A}$$
As you can see, it's the same result as what you got using your method A. Your your third method would get the same derivative as the first line in \eqref{eq2A}, so it would also match the result of your method A.