Answer: B. The formal handshake was quite unsuitable between such good friends.
Explanation: The word "duly" suggests that something is proper or suitable to a predefined degree. Sentences A and C both indicate this from the get-go with words such as "properly" and "appropriately." Because of this, we can remove the phrases in both sentences and see that they are still semantically accurate.
E.g. Dressed in mittens, scarf, and gloves, she was duly prepared for the winter's day.
(We still know that our subject was prepared for the day in the appropriate fashion.)
E.g. The formal handshake was duly unsuitable between such good friends.
(The word "duly" and "unsuitable" contradict each other, which is also known as juxtaposition!)