I think you can say all three. If you already know the departure date is Wednesday, of course C is absolutely the best answer. If Jill is saying it the same day that Mary said it, A is also correct. So all three may be correct depending on when she is saying it. In fact, in real life people are likely to say C the most, then A, and then B last. Suppose Jill is saying it two days after Mary said it, she could say one of the three: A. Mary said (that) she was going to London in 8 days. B. Mary said two days ago that she was going to London 10 days later. C. Mary said that she is going to London on Wednesday. Who in the world would say it like B which is the longest and the most clunky? This is the kind of "grammar question" for grammar's sake which is totally useless.

I can't see why A is not the correct answer - after all, Jill is relaying what Mary said, and she said 'in 10 days'. C is not correct. I assume that there is no more context than what has been provided? In which case, you can't know what day Mary spoke, therefore you can't know that her day of departure will be a Wednesday. Even if you did have additional information (that you have not provided here), which allows you to deduce that her day of departure is a Wednesday, C would not be correct - why? Because if the day that Mary made her statement is 10 days prior to the Wednesday of her departure, then there will be another Wednesday occurring before the departure Wednesday - so if you answer that she is going on Wednesday(without including the additional information that it is 10 days hence) then the listener will naturally assume that she will leave on the next Wednesday to occur, which will be one week prior to her actual departure.

If you know it is on Wednesday, then you can say "Mary said she was going to go to London on Wednesday". From the prompt, however, you don't know if it's on Wednesday or not - this is why C would not be a good answer for this test question.

You could say it if you knew it and it was in context. It is not best answer.