The answer is (b): the ball will be in the cup, as seen in the photograph below and in a short mpeg video by clicking your mouse on the photograph.
When the pole is released and begins to fall, the pole is in a local inertial frame of reference, in which all of the accelerating masses become weightless. Because the ball is weightless the spring will immediately compress, pulling the ball into the cup. A slow-motion version of the movie is also available.
