How to quit a potential paper with my Master's supervisor when I am already doing the PhD somewhere else?
I would choose b) if I don't have much time to spare.

Work on every paper incurs an opportunity cost. Time spent at one place cannot be spent at another. If you have many exciting projects that need the time that you cannot afford to spend elsewhere, b) is what I would perceive to be the best option.

If however I have lots of time to spare, and no other project to work on, I would pick c). A publication increase is always a good thing in this case.