Relay Contact Rating
Generally, the relay can switch 0.85A/120V if it is rated at 3A/120V. (Actually, the relay is also rated at 360 VA /and 90 Watts,/ so a 100 Watt lamp may be just above the grade for this relay, depending on how that Watt rating was calculated.)

The electrical insulation of the relay is rated at > 500V, so if you keep your soldering and wiring correctly isolated, you'll be fine. Wrap all bare conductors in electrical tape to avoid accidents.

It is unlikely that the relay will be properly driven directly by the Arduino. The Arduino is specified to 25 mA output per pin (with a 40 mA max) and most relay coils that are 5V capable draw 60 mA or more, and thus would burn out the Arduino output pin. You will need a small-signal transistor or MOSFET to actually pull the coil of that relay. Try a BS170, with the Arduino driving the gate, and the relay being between drain and positive DC voltage, and the source being tied to ground.

Finally, I don't understand what you mean by "C terminal." I assume you mean the "coil" terminal. A "Form C relay" is a relay that switches one input (or more) between two separate outputs (or more.) Keeping 120V on one half and an Arduino on the other half of such a relay seems unwise.