This is exactly right. The premise establishes that immortal souls are necessary for a moral order. But the conclusion treats immortal souls as sufficient for an element of that moral order (punishment of the bad). "Depends upon" means "requires," not "is guaranteed by."

The author describes beliefs held by various cultures (karma, a supreme being dispensing justice) but never claims these beliefs are true. The second sentence is background context that illustrates different conceptions of moral order. The author's actual reasoning is based on the logical relationship stated in the first sentence, not on the truth of any culture's beliefs.

(C) gets the argument's structure wrong in both directions. First, the premise does not claim that immortality implies moral order. It claims that immortality is necessary for moral order, which is the reverse direction (moral order implies immortality). Second, the conclusion does not assert that moral order implies immortality. The conclusion asserts that immortality implies punishment (an element of moral order). So (C) mischaracterizes both the premise and the conclusion.

The two conceptions of moral order (karma-based reincarnation and divine justice after death) appear in the second sentence, but they're just illustrations. The author isn't using them as evidence for the conclusion. The conclusion follows from the first sentence's claim about what moral order depends upon. Since the two conceptions play no role in the argument's logic, treating them as equivalent (even if the author did) wouldn't be the flaw that undermines the reasoning.

Circular reasoning means the conclusion just restates a premise in different words. But that's not what happens here. The premise says immortality is necessary for moral order ("depends upon"). The conclusion says immortality is sufficient for an element of moral order ("if immortal, then bad will be punished"). These are genuinely different claims.