If you made the deposit before year end 2023, you should report the high balance on 8938 (and FBAR/FinCEN) with the deposit, even though that same asset will be reported on 3520.
There are many cases when the same funds are somewhat double counted on these reports due to moving funds around. That is perfectly acceptable, and even expected.
For example, if I have $50,000 in my savings account and move it to my checking account and it causes a new high watermark in that account, I am going to have to report that same $50,000 in both accounts. However, the IRS and FinCEN aren't really looking to add these up and determine your total net worth - they are looking for a host of other things (most of which they won't share with us!)
So, of your options, it seems "C" fits the best. You will report the actual high balance on your 8938 and then on 3520 you report the value of the funds that were acquired through your inheritance.
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