Remark
Let's begin with the theme. What is the theme of this passage, exactly? Four people -- five if you include Dr. Heidegger -- are sitting around a circle bemoaning the fact that they have lost something not granted to anyone. They have lost their second youth. They have swallowed some water which gave them their youth only for a fleeting moment (it seems to them), and they mourn the passage of time that grants them no more youth that they had been living in for some short period.
The four felt that way. Only Dr. Heidegger seemed to have learned something that told him that he should be careful what he wished for: he might actually get it.
We have two themes then. We have 4 who wished for their youth back and we have one who didn't want any part of it. I think we have to cover both.
The best detail for those wanting it is the old woman who apparently got her youth back and she was incredibly beautiful. Now her hands are skinny and likely wrinkled. She puts those hands to her face and wishes herself to be dead because she despises the fact that she is old (and likely all her friends are dead and she is condemned to a life of weariness. I speculate, but is certainly unhappy about the aging process). She mourns that it is over so quickly. They all do. That's sentence 3.
Only Dr. Heidegger seems to understand that they got something they should never have received in the first place. The yellow sentence beginning with "Well I bemoan it not, ... " reflects his point view as well as anything. That's sentence 5.
Answer: The right answer is "Miss Lottie was one of the poorest people in the neighborhood."
Explanation: Since in this passage there are still no references to the character of Miss Lottie, it is not yet possible to infer that she was an outcast who did not take care of her home, as she truly was. In addition, it cannot be inferred that she lived alone (which she didn't) or that she wished she could afford a better house. The description of the house, however, does reveal that hers was one of the most rundown homes in an already extremely poor neighborhood, since it was not properly maintained.
Yes, there have been many times when you have to lie to get out of a situation. For example, I remember a time when I was being asked humiliating questions by a total stranger, so I lied and said that I had to go due to family issues including my mother. It is okay to lie in uncomfortable situations.