Step 1: Understand living fossils.
A living fossil is an organism that has remained virtually unchanged for millions of years, retaining features from ancient species. The term "living fossil" is often applied to species that were thought to have been extinct but were later rediscovered.
Step 2: Review the options.
- Amphioxus is a simple chordate and has remained relatively unchanged but is not considered a "living fossil."
- Varanus (a type of monitor lizard) is not a living fossil.
- Lamprey is an ancient fish but is still not classified as a living fossil.
- Latimeria, the coelacanth, was thought to have been extinct until it was rediscovered in the 1930s and is considered a true living fossil.
Step 3: Conclude.
Latimeria, the coelacanth, is the true living fossil among the options, making option (D) the correct answer.
Final Answer:
\[
\boxed{\text{Latimeria}}
\]