Oliver Cowdery omitted the subordinate conjunction that when copying from 𝓞 into 𝓟. This deletion may have been intentional; the original phrase does seem to be somewhat awkward, especially because of the fronting of the direct object this. Compare the original sentence with the more normal sentence where the this is not fronted: “and they said that he had done this because of the foolish imaginations of his heart”. For this nonfronted version, the that would have been perfectly acceptable. Such fronting is especially rare in the text when the main verb is say. One other example is in Mosiah 18:29: “and this he said unto them / having been commanded of God”. (For additional examples of deleting that after the verb say, see THAT in volume 3.)
Summary: Restore the subordinate conjunction that in 1 Nephi 2:11 (“and this they said that he had done because of the foolish imaginations of his heart”).