Let's put more details in the given figure to better understand the problem:
Considering the rules to be like this.
Starting with number 34, Y will be:
Y = 34 + 7 = 41
41 is >29 : YES
41 is not >43 : NO
41 is >35 : YES
Therefore, it will lead you to File M.
Therefore, starting at 34, it will lead to File M.
ANSWER: Letter C