Cold temperature can't "flow" into a warmer object, in this case, the person's hand. The heat energy of the hand gets transferred to the colder object, the ice.
Answer: Last option (total energy always remains constant)
Explanation:
The Law of Conservation basically states that energy cannot be created or destroyed. Only changed from one form to another (potential, kinetic, chemical, etc.) so it makes sense that the net energy is unchanging.
You can't turn seconds into joules. You need more information. The most helpful information would be if you knew the power. Then the joules would be the product of Watts times seconds.