It should be the first approach.
You are correct about the fact that the pass rate will remain the same, no matter what the attempt is. However, the question doesn't ask that. If the question was "What is the probability of him passing in the third exam?. For this, the answer would be 0.1, as you've written.
Here, the question implies that he failed in the first two exams and passed in the third. Hence, the answer is 0.9 x 0.9 x 0.1