Step 1: Find the Radius
The length of the wire $L$ forms a semicircle, so $L = \pi R \implies R = \frac{L}{\pi}$.
Step 2: Moment of Inertia Formula
The axis XX' passes through the center and is in the plane of the ring (diameter). For a ring, $I_{diameter} = \frac{1}{2} MR^2$.
Step 3: Calculation
$I = \frac{1}{2} M \left( \frac{L}{\pi} \right)^2 = \frac{ML^2}{2\pi^2}$.
Final Answer: (C)