Final answer:
The correctly punctuated sentence is "We just saw Captain Kangaroo: The Revenge of Dancing Bear; I did not expect that plot twist!" Colons introduce and semicolons link independent clauses; these punctuations should be placed outside quotation marks unless they are part of the quoted material.
Step-by-step explanation:
The sentence that uses punctuation correctly among the provided options is: "We just saw Captain Kangaroo: The Revenge of Dancing Bear; I did not expect that plot twist!" Here, the colon is used to introduce the title of a film, and the semicolon separates two independent clauses. When punctuating sentences, colons and semicolons should be placed outside quotation marks unless part of the quotation. Moreover, colons introduce items, lists, or explanations, and semicolons link two independent clauses that are closely related or when a conjunctive adverb connects the clauses.
To correct some of the example sentences: "For class, I had to read the sequel to Frankenstein; it was a real letdown compared to the original." Here, a semicolon is used because two independent clauses are connected without a conjunction. In the case of "Critics agree that Johnson's latest album, 'Magnitude', is his best work yet," the comma is placed inside the quotation marks because it is part of the sentence and not the title of the album.