Step 1: Hydrolysis of benzene diazonium chloride
Benzene diazonium chloride on hydrolysis with water gives phenol:
\[
C_6H_5N_2^+Cl^- + H_2O \rightarrow C_6H_5OH + N_2 + HCl
\]
So,
\[
X=\text{Phenol}
\]
Step 2: Reduction of phenol with Zn dust
Phenol on heating with zinc dust gets reduced to benzene:
\[
C_6H_5OH + Zn \rightarrow C_6H_6 + ZnO
\]
So,
\[
Y=\text{Benzene}
\]
Step 3: Gattermann-Koch reaction
Benzene reacts with:
\[
CO+HCl
\]
in presence of:
\[
\text{Anhydrous } AlCl_3
\]
to form benzaldehyde.
\[
C_6H_6 \rightarrow C_6H_5CHO
\]
So,
\[
Z=\text{Benzaldehyde}
\]
\[
\boxed{Z=\text{Benzaldehyde}}
\]
Therefore, the correct answer is:
\[
\boxed{(B)}
\]