Please see the problem below:
If, as the problem says, all it needs is for the group of figures to form either a square OR a rectangle, then doesn't all 4 choices allow you to form either a rectangle or square?
In the answer key though, it says that the answer is (C). However, can't the figures in (C) form a rectangle in this formation:
B B S
B B S
where B stands for the bigger rectangle and and S is the smaller rectangle?
We are quite confused with this and would appreciate any help. Thanks

You are correct. For $C$ there are many solutions, for example $SBBBBS$ would work as well. However it seems that $A$ is problematic unless the middle sized rectangles can cover the length of the longer one.