ALSO I usually roll all my dice at the same time (including damage if i don't use the average for monsters)to speed things up so it's tough to call which attack happened first, so I would err to scenario B. But if I knew it was two death fails I would have announced that and hopefully other players would have been quicker to come to his aid knowing how grave it was.
As a hopefully humble new DM I would never punish the players for my mistake. I won't retcon the death as already happened, but restate the rules now that I understand them better and hope they make good choices in the next few rounds to save him and get out, and use it as a learning experience for all.
Well, think of it this way. Hit 1 drops the character unconscious. Does that monster keep attacking the unconscious enemy?
In my campaigns, very few will unless they a) are experienced fighting adventurers and have seem how quickly they can revive each other, b) have magic of their own so they know what is possible, c) are mindlessly life-hating and non-conscious like zombies, or d) intentionally horrifying and hateful creatures like demons.
And, when those creatures come into play, I telegraph it a lot, especially to new players. At the start of the fight, they should feel some quivering, primal fear deep within their bones, in the way lots of people say they do after hearing a Lion's roar in the wild. Like, the human combatants move with a practiced cold efficiency that belies any fear or hesitation. Or, the gaze of the undead makes you feel like it hates you in a way you've never seen, and you have a feeling it will stop at nothing to kill. That way, when someone drops and gets hammered to a paste, it feels more fair.
Hell, if you are more of a storyteller-type DM (rather than the verisimilitude-driven 'let the chips fall where they may' type), and the players are new, I'd even intentionally have a situation where someone, not a party member, gets ripped to shreds when they're down, when the party still has a chance to retreat and talk it over. Use these sorts of events to give the players 'world-building' knowledge so they're not surprised.
So, back to the point. First hit knocks the character out. Does the monster keep going?
If the answer is 'no', based on your interpretation, I'd consider retconning it so the character is alive. It's the only fair thing to do, since the more correct interpretation of the rule would mean the monster would have moved on from the unconscious, and still living character, quite possibly sparing his life. It will generate a lot of good will, if that's a likely outcome.
Also, I'd stop rolling all attacks at once, or at least roll the damage in order. It doesn't save much time if you're good. "16 miss, 21 hit, 24 hit. First hit 27 damage, -" Player: "I drop". Then you make up your mind.