Creatures that take up more than 1 square typically have a natural reach of 10 feet or more, meaning that they can reach targets even if they aren't in adjacent squares.
So you calculate the reach from the edge of the creature.
I second what meabolex states.
It's like B) except it breaks the diagonal rule: I.e., your under dashes in the image should be *.
Pathfinder does not have that exception. The dashes are correct.
3.5 D&D:
Reach Weapons
Glaives, guisarmes, lances, longspears, ranseurs, spiked chains, and whips are reach weapons. A reach weapon is a melee weapon that allows its wielder to strike at targets that aren’t adjacent to him or her. Most reach weapons double the wielder’s natural reach, meaning that a typical Small or Medium wielder of such a weapon can attack a creature 10 feet away, but not a creature in an adjacent square. A typical Large character wielding a reach weapon of the appropriate size can attack a creature 15 or 20 feet away, but not adjacent creatures or creatures up to 10 feet away.
Note: Small and Medium creatures wielding reach weapons threaten all squares 10 feet (2 squares) away, even diagonally. (This is an exception to the rule that 2 squares of diagonal distance is measured as 15 feet.)
Pathfinder:
each Weapons: Glaives, guisarmes, lances, longspears, ranseurs, and whips are reach weapons. A reach weapon is a melee weapon that allows its wielder to strike at targets that aren't adjacent to him. Most reach weapons double the wielder's natural reach, meaning that a typical Small or Medium wielder of such a weapon can attack a creature 10 feet away, but not a creature in an adjacent square. A typical Large character wielding a reach weapon of the appropriate size can attack a creature 15 or 20 feet away, but not adjacent creatures or creatures up to 10 feet away.
No additional paragraph with the exception.
kdlsmith, what Jeraa said is correct. by RAW, that exception is gone in Pathfinder. In addition, that exception in 3.5e applied ONLY to small and medium characters, so even in 3.5e, that would not come into play since the creature we're talking about here is large (as indicated by the 10 ft size.) That said, using the added bolded phrase is a very common house rule for groups to use in pathfinder. JJ himself said it isn't part of the rules, but that people are free to house rule it. All the groups I play in house rule it because it just doesn't make sense for a small or medium character with reach weapon to have a hole in is defenses if they enemy attacks him at a certain angle. We see this as an unintended consequence of using squares to represent the battle field, so we house rule it.
All the groups I play in house rule it because it just doesn't make sense for a small or medium character with reach weapon to have a hole in is defenses if they enemy attacks him at a certain angle.
The official interpretation is with a medium creature with 10' reach, you threaten the second diagonal square only when a creature in that square provokes by moving directly towards you. The AoO happens in that 15' square, not the adjacent one. You don't threaten the square for all other purposes (making a regular attack, threatening for all non-movement, or movement to the side or away).
For people clicking the link, I follow up that linked post with a clarification here, to which SKR responds two posts down here.