[guided]The heart of the proof is showing that the maximal element must satisfy $M = K$. The argument proceeds by contradiction: if $M \subsetneq K$, we show we can extend $\tau_M$ to a strictly larger intermediate field, contradicting maximality.
Pick $\alpha \in K \setminus M$. Since $K/k$ is algebraic, $\alpha$ is algebraic over $k$, and since $k \subset M$, $\alpha$ is also algebraic over $M$. Let $m_{\alpha, M} \in M[x]$ be the minimal polynomial of $\alpha$ over $M$. This is an irreducible polynomial of degree $d \geq 1$ (it has degree $\geq 1$ because $\alpha \notin M$).
The key idea is to use $\tau_M$ to "transport" $m_{\alpha, M}$ into $\Omega[x]$, then find a root of the transported polynomial in $\Omega$ (which exists because $\Omega$ is algebraically closed), and use that root to define the extension.
Write $m_{\alpha, M}(x) = \sum_{j=0}^{d} c_j x^j$ with $c_j \in M$. Apply $\tau_M$ coefficient-by-coefficient to get $\tau_M(m_{\alpha, M})(x) = \sum_{j=0}^{d} \tau_M(c_j) x^j \in \Omega[x]$. Since $\Omega$ is algebraically closed and this polynomial has degree $d \geq 1$, it has a root $\beta \in \Omega$.
Now define $\tau': M(\alpha) \to \Omega$ as follows. Every element of $M(\alpha)$ can be written as $g(\alpha)$ for some $g \in M[x]$ with $\deg g < d$ (using the isomorphism $M(\alpha) \cong M[x]/(m_{\alpha, M})$). Set $\tau'(g(\alpha)) = \tau_M(g)(\beta)$, where $\tau_M(g)$ is obtained by applying $\tau_M$ to the coefficients of $g$.
Why is $\tau'$ well-defined? If $g(\alpha) = h(\alpha)$ in $M(\alpha)$, then $(g - h)(\alpha) = 0$, so $m_{\alpha, M}$ divides $g - h$ in $M[x]$. Write $g(x) - h(x) = m_{\alpha, M}(x) \cdot q(x)$ for some $q \in M[x]$. Applying $\tau_M$ to coefficients: $\tau_M(g)(x) - \tau_M(h)(x) = \tau_M(m_{\alpha, M})(x) \cdot \tau_M(q)(x)$. Evaluating at $\beta$: $\tau_M(g)(\beta) - \tau_M(h)(\beta) = \tau_M(m_{\alpha, M})(\beta) \cdot \tau_M(q)(\beta) = 0 \cdot \tau_M(q)(\beta) = 0$.
One can verify directly that $\tau'$ preserves addition and multiplication (it is defined via the ring homomorphism $M[x] \to \Omega$ given by applying $\tau_M$ to coefficients and evaluating at $\beta$, which factors through $M[x]/(m_{\alpha, M})$ because $\beta$ is a root of $\tau_M(m_{\alpha, M})$). As a non-zero homomorphism between fields, $\tau'$ is injective. For any $c \in M$, $\tau'(c) = \tau_M(c)$, so $\tau'$ extends $\tau_M$.
This gives $(M(\alpha), \tau') \in \mathcal{S}$ with $(M, \tau_M) < (M(\alpha), \tau')$, since $M \subsetneq M(\alpha)$ (as $\alpha \notin M$). This contradicts the maximality of $(M, \tau_M)$.[/guided]