Here "privy" means (quoting from the dictionary) "made a participant in knowledge of something private or secret". So the sentence literally means "all Muslims do not know of God" (which is why I thought it to be extremely racist).
To translate an English sentence into a logic sentence, basically you need to assign symbols to each part of the English sentence. Here (II) is: $\forall x(A(x) \to \neg B(x))$.
First, there is no conjunction ("and") here, just an implication.
What you wrote would translate into $\forall x(\neg (A(x) \wedge B(x)))$, where $A(x)$ is "$x$ is a Muslim" and $B(x)$ is "$x$ is privy to God".
For ease of reference, let's call $S$ the original sentence, i.e. "each Muslim is not privy to God". Is it clear to you why this is the same as "for every person, if that person is a Muslim, then (s)he is not privy to God"?
$\forall x \neg [A(x) \wedge B(x)]$ is equivalent to $\forall x ( \neg A(x) \vee \neg B(x)) is equivalent to $\forall x (A(x) ---> \neg B(X)) ?!!!!!!!!!!!!!!!!!!!!!
Wait, it is true that $\neg A(x) \vee B(x)$ is equivalent to $A(x) \to B(x)$, but it doesn't come into the problem (there is no possible answer with a conjunction).
I also said that $\wedge$ (and $\vee$) are irrelevant for the problem at hand, because every available answer relies only on quantifiers, negations, and implications.
You can read $A(x) \to B(x)$ as "if $A(x)$ is true, then $B(x)$ is also true". The $\forall x$ in front of it means "the following formula holds for any $x$ you substitute into it".