Option A, "Create a Compute Engine instance template using the most recent Debian image. Create an instance from this template, and install and configure the application as part of the startup script. Repeat this process whenever a new Google-managed Debian image becomes available," is the correct choice.
This approach allows you to automate the process of creating a new instance with the latest Debian image and configuring the application. By using an instance template and a startup script, you can ensure that the application is correctly configured each time a new instance is created. When a new Debian image becomes available, you can simply create a new instance template and repeat the process.
Option B, using OS patch management, would allow you to install updates, but it wouldn't necessarily ensure that the application is correctly configured after an update.