Step 1: Concept
Magnetic moment is zero when there are no unpaired electrons (diamagnetic).
Step 2: Electronic Configuration
Lutetium ($Z=71$) has the configuration $[Xe] 4f^{14} 5d^1 6s^2$.
Step 3: Ion Analysis
In the $+3$ state ($Lu^{3+}$), it loses three electrons ($5d^1 6s^2$), resulting in $[Xe] 4f^{14}$.
Step 4: Conclusion
Since the $4f$ orbital is completely filled ($4f^{14}$), there are zero unpaired electrons, leading to zero magnetic moment.
Final Answer:(B)