Step 1: Formation of diazonium salt.
p-Toluidine on treatment with
\[
\mathrm{NaNO_2/HCl}
\]
at
\[
273\text{--}278\ \mathrm{K}
\]
forms
\[
\boxed{p\text{-methyl benzene diazonium chloride}.}
\]
Step 2: Check Set-I.
Treatment with
\[
\mathrm{CuCN/KCN}
\]
(Sandmeyer reaction) gives
\[
p\text{-methyl benzonitrile}.
\]
Hydrolysis converts it into
\[
\boxed{p\text{-methyl benzoic acid}.}
\]
Hence,
\[
\boxed{\text{Set-I is correct}.}
\]
Step 3: Check Set-II.
Reaction with
\[
\mathrm{CuBr/HBr}
\]
forms
\[
p\text{-bromotoluene}.
\]
Oxidation using
\[
\mathrm{KMnO_4/OH^-}
\]
followed by acidification converts the methyl group into
\[
\boxed{p\text{-bromobenzoic acid}.}
\]
Hence,
\[
\boxed{\text{Set-II is correct}.}
\]
Step 4: Check Set-III.
\[
\mathrm{H_3PO_2}
\]
reduces the diazonium group to hydrogen, producing toluene, not anisole.
Hence,
\[
\boxed{\text{Set-III is incorrect}.}
\]
Therefore,
\[
\boxed{\text{I and II only}}
\]
are correct.
Thus,
\[
\boxed{(A)}
\]
is the correct answer.