This is a complex sentence it includes a subordinate clause (one that CANNOT stand by itself), and a dependent clause. You can tell this because if I were to walk into a room and say, "When K and C read the same foldable....", you would be waiting to hear the rest, wouldn't you? A compound sentence has two independent clauses joined by a comma and a coordinating conjunction (but, and, for, nor, or, so, yet). A simple sentence is just an independent clause.
I believe it is answer choice B.
I believe that the general notation for your subtopics in an outline is B. capital letters.
Roman letters are used for topics, capital letters for subtopics, and the rest for supporting points.
The sentence "We are also told that it is on account of this happening that people who have loved each other very much sometimes quarrel and are no longer friends." best indicates the story's message or theme.
I believe 4 would be incorrect.