The letter y only appears / appears only in vying.

The word is vye.

Use only the vowel “y” in vying, not the “e.”

Actually, the word is VIE.

The differences are the placement of the word "only" in each sentence. Each sentence has its own meaning.

The modifier is "only" and should be placed next to what it's modifying (which is "appears").

I would be going with the second one.

There are some great grammar sites on the internet which may be more useful than this one because they explain the answer to your question and give examples.

Many thanks, Mame!

You're more than welcome, but like I said, there are many, many great sites on the internet. I taught ESL for several years and English is a tricky language to learn and to explain. Unless you're going to be writing a test, some of our rules should be tossed out the window.

Thanks, Mame!

Could you recommend a couple of sites?

Yes, I could, but everyone is at a different level. So the best thing for you is to google and find the right one for you. Truly, I would help you in this if I thought I could, but I don't know your level of understanding.

Best of luck to you!