Hey there!
The correct answer is A.) As a special treat, Lee invited friends to dinner and took them all out.
A doesn't seem akward, it seems perfectly fine
B is akward, because it states "and all of them were taken out", and it makes it sound different from the implied meaning.
C is akward, because it says "had taken", and in this type of sentence, the proper past tense form of "take" should be "took", not "taken".
Hope this helps! Good luck on your assignment!