B. He knew he didn't have to worry about Booth or Herold and the safety of his family. He knew them better than he ever let on.
Gene, let me preface this by saying that I've exchanged many e-mails with Ed Steers over the years (since 1996), and I agree with basically everything Ed has written about Mudd. I commend Ed for all his work. Ed has been most helpful in the work I do with students. I agree with Bill Richter when he said, "I think that the best presentation of Mudd's guilt is in Steer's, His Name Is Still Mudd. Mudd was guiltier than most supposed then and now."
However, in response to what you mentioned above, I personally don't think they knew each other really that well. As far as I know they had met only 3 times - once in November 1864, and twice in December 1864. The last meeting was December 23, 1864, which would have been over 3 1/2 months prior to April 15, 1865. Possibly a future kidnapping of Lincoln was discussed. Nevertheless, it's hard for me to really see them as being "buddies."
Maybe someone else can fill in some blanks, but offhand the only other direct Mudd/Booth connection I can think of is in Atzerodt's statement about liquor and provisions being sent to Mudd's for the trip with Lincoln to Richmond (this would be a reference to the kidnapping plans, not the assassination). And also what Laurie said about a possible Herold visit. In a very general way I think I feel the same about Mudd as I do about Mary Surratt; I think he had knowledge of the kidnap plot but probably not the assassination.
Part of the reason I stick with B is because Booth already knew certain folks were more agreeable with kidnapping than with with murder. I am not sure he knew Mudd well enough to know how he'd react to what happened at Ford's.