[guided]We now compute the Laplacian of the scalar function $e(u)$ without differentiating the normal-frame identity $B_{ij}(p)=\nabla^E_{e_i}A_j(p)$ as if it held to first order. The reason for introducing $B_{ij}$ is precisely to keep the calculation covariant: $B_{ij}$ is the component of the tensor $\nabla du$, while $\nabla^E_{e_i}A_j$ alone would miss derivatives of the moving frame.
For each $j$, define $A_j:=du(e_j)\in\Gamma(E)$, and for each pair $i,j$, define $B_{ij}:=(\nabla du)(e_i,e_j)\in\Gamma(E)$. By the definition of the induced connection on $T^*M\otimes E$,
\begin{align*}
B_{ij}=\nabla^E_{e_i}(du(e_j))-du(\nabla^M_{e_i}e_j).
\end{align*}
At the fixed point $p$, the normal-frame condition gives $\nabla^M_{e_i}e_j(p)=0$, so
\begin{align*}
B_{ij}(p)=\nabla^E_{e_i}A_j(p).
\end{align*}
This equality is used only at the point $p$, not differentiated as an identity of sections.
The energy density is
\begin{align*}
e(u)=\frac12|du|^2=\frac12\sum_{j=1}^m h(A_j,A_j).
\end{align*}
The subtle point is that $B_{ij}(p)=\nabla^E_{e_i}A_j(p)$ is only a pointwise equality. Away from $p$ there is an extra moving-frame term. To account for it, define smooth real-valued functions $\Gamma_{ij}^k$ by
\begin{align*}
\nabla^M_{e_i}e_j=\sum_{k=1}^m \Gamma_{ij}^k e_k.
\end{align*}
Because the frame is $g$-orthonormal and $\nabla^M$ is metric-compatible,
\begin{align*}
0=e_i g(e_j,e_k)=g(\nabla^M_{e_i}e_j,e_k)+g(e_j,\nabla^M_{e_i}e_k)=\Gamma_{ij}^k+\Gamma_{ik}^j.
\end{align*}
Thus $\Gamma_{ij}^k=-\Gamma_{ik}^j$: for fixed $i$, the connection coefficients are skew-symmetric in the frame indices $j,k$.
Metric compatibility of $\nabla^E$ gives
\begin{align*}
e_i e(u)=\sum_{j=1}^m h(\nabla^E_{e_i}A_j,A_j).
\end{align*}
Using the identity $\nabla^E_{e_i}A_j=B_{ij}+du(\nabla^M_{e_i}e_j)$, we obtain
\begin{align*}
e_i e(u)=\sum_{j=1}^m h(B_{ij}+du(\nabla^M_{e_i}e_j),A_j).
\end{align*}
Substituting $\nabla^M_{e_i}e_j=\sum_{k=1}^m\Gamma_{ij}^k e_k$ gives
\begin{align*}
e_i e(u)=\sum_{j=1}^m h(B_{ij},A_j)+\sum_{j,k=1}^m \Gamma_{ij}^k h(A_k,A_j).
\end{align*}
Why does the second sum disappear? The coefficient $\Gamma_{ij}^k$ changes sign when $j$ and $k$ are interchanged, while $h(A_k,A_j)=h(A_j,A_k)$ is symmetric. Pairing the $(j,k)$ and $(k,j)$ terms therefore cancels the whole sum, including the diagonal terms because $\Gamma_{ij}^j=0$. Hence, as an identity of functions on the frame neighbourhood,
\begin{align*}
e_i e(u)=\sum_{j=1}^m h(B_{ij},A_j).
\end{align*}
This is the identity we may safely differentiate.
At $p$, the scalar Laplacian in a normal orthonormal frame is
\begin{align*}
\Delta_g f(p)=\sum_{i=1}^m e_i e_i f(p)
\end{align*}
for every smooth real-valued function $f:M\to\mathbb R$. Differentiating the preceding identity gives
\begin{align*}
\Delta_g e(u)(p)=\sum_{i,j=1}^m e_i h(B_{ij},A_j)(p).
\end{align*}
Using metric compatibility of $\nabla^E$ on each summand, this becomes
\begin{align*}
\Delta_g e(u)(p)=\sum_{i,j=1}^m h(\nabla^E_{e_i}B_{ij},A_j)(p)+\sum_{i,j=1}^m h(B_{ij},\nabla^E_{e_i}A_j)(p).
\end{align*}
Only now do we use the normal-frame equality at the point $p$: since $\nabla^M_{e_i}e_j(p)=0$, we have $\nabla^E_{e_i}A_j(p)=B_{ij}(p)$. Therefore
\begin{align*}
\Delta_g e(u)(p)=\sum_{j=1}^m h\left(\sum_{i=1}^m\nabla^E_{e_i}B_{ij},A_j\right)(p)+\sum_{i,j=1}^m h(B_{ij},B_{ij})(p).
\end{align*}
The last sum is $|\nabla du|^2(p)$ by the definition of the pointwise tensor norm in the orthonormal frame. Therefore
\begin{align*}
\Delta_g e(u)(p)=\sum_{j=1}^m h(C_j,A_j)(p)+|\nabla du|^2(p),
\end{align*}
where $C_j:=\sum_{i=1}^m\nabla^E_{e_i}B_{ij}(p)\in E_p$. The remaining task is to identify $C_j$ by commuting the covariant derivatives of the tensor $du$.[/guided]