Final answer:
The indication that an aneroid device has shorted out on a hydromechanical truck diesel engine is typically smoking at rated speed and load, as it implies over-fueling and incomplete combustion.
Step-by-step explanation:
The correct indication that an aneroid device has been shorted out on a hydromechanical highway truck diesel engine is most likely 'c. Smoking at rated speed and load'. This is because when an aneroid device fails or shorts, it typically affects the fuel delivery system's pressure regulation, which can lead to over-fueling of the engine. Over-fueling, in turn, results in incomplete combustion and causes the engine to smoke when operating at rated speed and load conditions.
On the other hand, increased top end power and improved lug performance are generally signs of proper engine function rather than signs of a malfunctioning aneroid device. Moreover, a puff of exhaust smoke at each upshift does not directly suggest that the aneroid device is malfunctioning; it could be caused by various other factors in the engine or transmission system.