Step 1: Define a functionally complete set of gates.
A set of logic gates is functionally complete if any possible Boolean function can be realized using only the gates in that set. NAND and NOR gates are known as universal gates because they are functionally complete by themselves.
Step 2: Evaluate the given gates.
(i) NAND: The NAND gate is a universal gate. It can be used to create NOT, AND, and OR functions. Therefore, it is a functionally complete set.
(ii) NOT: The NOT gate only performs inversion. It cannot create AND or OR logic. Therefore, it is not functionally complete.
Since NAND (I) is functionally complete and NOT (II) is not, the correct option is "I but not II".