There will be dead lock, but mutual exclusion is satisfied.
suppose X executes and sets p to true then preempts, now Y executes and sets q to true, now when Y goes to while statement it will loop forever, same happens with X.
Most answers are misinterpreting the definition of deadlock and misunderstanding the mutual exclusion condition of Deadlock characteristics with mutual exclusion of critical section.
The definition of Deadlock is :Deadlock is any situation in which no member of some group of entities can proceed because each waits for another member, including itself, to take action, such as sending a message or, more commonly, releasing a lock.
Also if we find even a single case in which deadlock occurs then the solution is said to not prevent deadlock.
Mutual exclusion in synchronization means only one process should enter cs, while mutual exclusion of deadlock characteristics is about a resouurce being owned by only a single process. Take printer for example, only one computer can use it at a time, so this ME can not alwasy be dissatisfied. which now brings me to another point:
ME of synchronization is property that must be enforced by a solution, while ME of deadlock characteristics is a property that should be removed to prevent deadlock. Do you see the difference? in one case we need ME to be present while in another case we need it to go away.
Students are confusing Mutual exclusion in both cases, when working with semaphore mutual exclusion doesn’t have anything to do with deadlock, both are different.
So answer is B