Step 1: Understanding the Concept:
Each of the 7 True/False questions can be answered in exactly 2 ways. Every student has a different sequence of answers, so the number of students cannot exceed the number of possible sequences.
Step 2: Key Formula or Approach:
By the fundamental counting principle, the number of answer sequences is \(2^7\). One of them is the all-correct sequence, which no student has.
Step 3: Detailed Explanation:
Total sequences:
\[ 2^7 = 128 \]
Remove the all-correct sequence, since no student got all answers correct:
\[ 128 - 1 = 127 \]
Because every student has a unique sequence, the maximum number of students equals the number of allowed sequences, 127.
Option (A) 128 includes the forbidden all-correct sequence. Options (B) 126 and (D) 125 remove more sequences than the one excluded.
Final Answer:
The maximum number of students is 127, option (C).
\[ \boxed{127 \text{ (C)}} \]