Theoretical models of the (d,p) reaction are exploited for both nuclear astrophysics and spectroscopic studies in nuclear physics. Usually, these reaction models use local optical model potentials to describe the nucleon- and deuteron-target interactions. Within such a framework the importance of the deuteron D-state in low-energy reactions is normally associated with spin observables and tensor polarization effects - with very minimal influence on differential cross sections. In contrast, recent work that includes the inherent nonlocality of the nucleon optical model potentials in the Johnson-Tandy adiabatic-model description of the (d,p) transition amplitude, which accounts for deuteron break-up effects, shows sensitivity of the reaction to the large n-p relative momentum content of the deuteron wave function. The dominance of the deuteron D-state component at such high momenta leads to significant sensitivity of calculated (d,p) cross sections and deduced spectroscopic factors to the choice of deuteron wave function [Phys. Rev. Lett. {bf 117}, 162502 (2016)]. We present details of the Johnson-Tandy adiabatic model of the (d,p) transfer reaction generalized to include the deuteron D-state in the presence of nonlocal nucleon-target interactions. We present exact calculations in this model and compare these to approximate (leading-order) solutions. The latter, approximate solutions can be interpreted in terms of local optical potentials, but evaluated at a shifted value of the energy in the nucleon-target system. This energy shift is increased when including the D-state contribution. We also study the expected dependence of the D-state effects on the separation energy and orbital angular momentum of the transferred nucleon. Their influence on the spectroscopic information extracted from (d,p) reactions is quantified for a particular case of astrophysical significance.