1. Progress is not satisfied here. Suppose P1 is in leave_CS() and going to execute X=0 whereas P2 trying to enter critical section is iterating in the while loop. So this shows that P1 which is not interested in entering in to CS is blocking P2 which is interested to enter into CS. Hence Progress not satisfied.
2. Coming to option 2 of Starvation. Lets suppose P1,P2,P3 as three processes. Now P1 enters CS and P2,P3 are iterating the while loop. Now when P1 exexutes X=0,then immediately instead of P2, P3 gets into CS. This shows there is starvation.