**Core Concept**
Alzheimer's disease is a neurodegenerative disorder characterized by the accumulation of amyloid plaques and neurofibrillary tangles (NFTs) in the brain, leading to neuronal loss and cognitive decline. The pathophysiology involves the aggregation of amyloid-beta peptides and hyperphosphorylated tau protein, which contribute to neuronal damage and dysfunction.

**Why the Correct Answer is Right**
Neurofibrillary tangles (NFTs) are formed intracellularly within the neuron, specifically in the axon and dendrites. They are composed of abnormally phosphorylated tau protein, which accumulates and aggregates, leading to neuronal damage and death. In contrast, neuritic plaques are formed extracellularly, consisting of amyloid-beta peptides that deposit between neurons. The correct sequence of appearance is neuritic plaques extracellularly, followed by NFTs intracellularly. This sequence is crucial in understanding the progression of Alzheimer's disease pathology.

**Why Each Wrong Option is Incorrect**
**Option A:** Neuritic plaques are indeed formed of amyloid protein, specifically amyloid-beta peptides. This statement is true and represents a hallmark of Alzheimer's disease pathology.
**Option B:** Neurofibrillary tangles (NFTs) are indeed made of tau protein, which is abnormally phosphorylated and aggregated. This statement is true and highlights the role of tau protein in Alzheimer's disease.
**Option D:** The number of NFTs does correlate with the severity of dementia in Alzheimer's disease. As the number of NFTs increases, cognitive decline and dementia worsen. This statement is true and reflects the relationship between NFTs and disease progression.

**Clinical Pearl / High-Yield Fact**
A key feature of Alzheimer's disease pathology is the presence of amyloid-beta plaques and tau protein tangles. These lesions are not only hallmarks of the disease but also potential therapeutic targets. Understanding the sequence of appearance and the composition of these lesions is essential for developing effective treatments and diagnostic strategies for Alzheimer's disease.

**✓ Correct Answer: C. NFTs appear extracellularly before intracellular appearance**