As is used to mean because, but it is also used when two events happen at the same time.
In "I must stop now as I have to go out." it means because, but in "She watched him as the train passed close to his house." it doesn't mean because.
As for the sentences you used as examples, both are correct.
I presume that you are talking about what happened when the pregnant lady got onto the bus: you didn't offer her your seat (bad you!). The lady getting onto the bus is a single event, so you use simple past to describe it.
the lady got onto the bus.
If a second event occurs, you would also use simple past:
I sat down at the same time as the lady got onto the bus.
If you were in the middle of doing something when the first event occurred, you would used past continuous:
I was sitting when the lady got onto the bus.
In your example, you were in the middle doing something (sitting) when you decided not to offer your seat to the pregnant lady. Option b) is therefore correct.
According to the Cambridge Dictionary, seated can be used as an adjective meaning sitting, so option c) is also correct.
Option a) is not appropriate because it would be taken in this context to refer to a single event.
Note that you can use simple past to describe a
habitual action in the past,
if you specify a time period:
When I was at school, I sat next to Claire Johnson.
Or to describe a situation that went on for some specified time:
I sat next to Claire all evening.
Best Answer
"Sitting" is dubiously "an activity", so the distinction is pretty much non-existent, but if you're splitting hair, seated is a passive form, used in context of state, as opposed to activity. There is no practical difference although you'd rather write about lazy, comfortable way of sitting as "being seated", and attentive, firm, active as "sitting".
There is a significant difference though, if "he was seated by someone". That means he sat down there following someone's direction. You could say:
It means the usher guided you to these chairs and asked you to sit there.
means the usher was sitting in another chair, next to yours.
The person may be implied. That means the original sentence still may imply someone seating "him".
And yes, it does create an ambiguity.
doesn't mean the exit told you to sit, but that someone told you to sit next to the exit (or that you were just sitting there). And if instead of "exit" that will be "the guy selling pop-corn" it becomes quite unclear, whether someone told you to sit next to that guy, or that guy found you a place to sit.