Step 1: Concept
Reaction of Grignard reagent with formaldehyde ($HCHO$) yields a primary alcohol.
Step 2: Meaning
Isopropyl magnesium bromide + $HCHO$ $\rightarrow$ Isobutyl alcohol derivative.
Step 3: Analysis
The Grignard reagent is $(CH_3)_2CHMgBr$. Reacting with $HCHO$ adds one carbon to the chain, resulting in 2-methyl-1-propanol.
Step 4: Conclusion
Hence, the correct answer is 2-methyl-1-propanol.
Final Answer: (D)