C). The soldier is a Federal scout posing as a Confederate soldier that tricks Farquhar into attempting to sabotage the bridge and being captured for doing so.
Explanation:
The story titled 'Occurrence at Owl Creek Bridge' by Ambrose Bierce primarily displays the brutal consequences of war as it makes people cruel and detach them from personal life.
As per the question, the interaction between the soldier and Farquhar in the part II assist in advancing the plot of the story as 'the soldier is working as the confederate soldier which tricks Farquhar to involve in sabotage that eventually led him to get captured' which is the key event of the story as it reveals the reason for Farquhar's hanging. It also assists in reflecting the theme of 'fear of death altering one's perception as well experience of time.' Therefore, <u>option C</u> is the correct answer.