Step 1: Understanding the context.
The sentence is referring to a past action that was completed by a specific time (7:30 PM). The correct choice is "must be" because it indicates necessity or requirement for an action to be completed by a certain time.
Step 2: Evaluate each option.
Option (A): Incorrect, "were" is a past tense verb, but the sentence requires a modal verb to indicate obligation.
Option (B): Incorrect, "are" is present tense, which is not appropriate for this past event.
Option (C): Correct, "must be" conveys the necessity of being ready by the time mentioned.
Option (D): Incorrect, "should have" refers to a past obligation, but the sentence is describing a future action.
Hence, the correct answer is (C).