Use broad scope up to the enclosing parenthesis, consistent with (c). Thus the first conjunct is read as
is not free for substitution for . The free occurrence of in lies under ; inserting there would capture its . Rename that bound variable to a fresh first, using alpha equivalence. The capture-avoiding first-order substitution is then
Every occurrence of in the original formula is free, so all four are replaced. The variable introduced by the term remains free, and the final is unchanged.
Under the same scope convention, is not free for substitution for . The occurrence of inside is free but lies under , so its replacement would capture the new . Rename this binder to fresh . Substitute only for the free occurrences in the first conjunct:
The two occurrences of in the final conjunct are bound variables and remain unchanged. The inserted remain free.
If instead one gives the printed only the scope , this part's free-for-substitution answer becomes yes, because neither free occurrence then lies under that binder. Under that alternative parsing, the result is explicitly
The narrower reading does not change the negative answer in (1): its occurrence of inside still requires renaming that binder before substitution. The broad-scope answers above give a single consistent parsing across the paper.

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