B) "her" means the friend.
Explanation:
Both option B and C are correct as they are the same.
The line means that the friend was in the attendance along with the mother and the sister of the narrator. This can be deduced because in the sentence the friend is mentioned separately from the family to differentiate her from them.
So when hello is said to a woman, who could be either of the three it can be deduced that it is the friend being talked about as she was differentiated from the others in the previous sentence.