Step 1: Conservation of momentum.
Since the bullet remains embedded in the block, this is an inelastic collision. The total momentum before and after the collision must be conserved. The initial momentum of the system is \( mv \), and the final momentum is \( (m + M)v_f \). Thus, by conservation of momentum:
\[
mv = (m + M) v_f
\]
Solving for \( v_f \), the final velocity of the system:
\[
v_f = \frac{mv}{m + M}
\]
Step 2: Conclusion.
Thus, the correct answer is (D) \( \frac{mv}{m+M} \).