Class equipment
You did this right. You get all of the bulleted list of equipment, except where it asks you to choose either one option or the other using the (a), (b), (c) style of list. You don't have to "match up" the a's and b's, you can pick whatever from each line.
For the druid that means you get all three lines of equipment, which gives you armour, a pack, and a focus, and two choices to make: (shield or simple weapon) and (scimitar or simple melee weapon). Your bow is a legit choice for "simple weapon" from the former and the scimitar is also a legit choice from the latter.
The choices in each line aren't supposed to be linked, because if were, they would be directly linked together, not using a letter as a secret code. Instead of being written how they are, they would be written like this as a single bullet-item in the list:
- (a) A scimitar and wooden shield or (b) a simple melee weapon and a simple weapon
- Leather armor, pack, and focus
(I'm not directly copying the last line because it's not necessary for the example.)
You can see this in action with the "Building Bruenor" example. Bruenor is a Fighter with the Folk Hero background, and on page 15 of the PHB, Bruenor's player chooses "a battleaxe and two handaxes". Those are two "mixed" options from the Fighter's choices on page 72: the two handaxes are a (b) choice from the third line, and the battleaxe is an (a) choice from the second line.
Notice also how the directly-linked way of writing things that I described above is used for many of the Figher's options on that page, so that (e.g.) taking a single martial weapon requires also taking a shield.
So you did this right. Gently correct your DM on this. Point to Bruenor's choices on page 15 and the Figher's choices on page 72, and how they aren't following an "all (a) or all (b)" rule. The alternative is simply too restrictive on creating PCs, and doesn't even make sense for other classes that don't have letters that all match up.
Starting gold
This is up to your DM, but they should consider being flexible about it.
The point of taking the starting package of equipment is to get started playing quickly. While the option of rolling for starting gold and buying equipment is meant to represent having acquired useful items over your lifetime rather than actually buying them all of a sudden with a sackful of hundreds of gold pieces, the equipment provided by backgrounds is supposed to be the actual gear you begin play with, including the "pouch of x gold".
So your DM is within his rights as DM to enforce that... however, the DM is not necessarily right to enforce it.
If your DM is trying to make sure you create the character "right", they may be blindly following the book where, actually, the book expects the DM to take some responsibility for running the game. The DM has authority to say how the game is run, but that also comes with the responsibility to say how the game is run. They can't disclaim all decision making, blindly, to the game books. That leads to making bad decisions when, actually, the book doesn't really care very much about something.
This is one of those cases where it's not actually important, and the DM should take responsibility for their decision.
If the player asks, "Hey, can I spend this gold on something? I don't think my druid would have kept a bag of gold around for all these years, it would have been traded for useful tools and provisions already," then it's entirely within the DM's rights to say, "yeah, sure, that sounds sensible." It's also within the DM's rights to say, "No, you should have that bag of gold, it'll make more sense for how the game is starting." The DM should never blindly follow the book when the alternative is not harmful to the game, especially when the point is so trivial as this.
So ask your DM to reconsider. Say, yes, the book does say you start with a pouch of gold coins, but ask if it will hurt the game at all for you to say you've already traded it for useful things instead. If the DM is adamant, shrug and move on — you can use it as an excuse for why your druid ends up in a town later: you want to buy a fishhook from these crafty but filthy city-dwellers!
If your DM is amenable to bending on this trivial point — and they might not be, if they're feeling insecure about their grasp of the game or their authority as DM — then it's fine. The important thing is to bring this to your DM for reconsideration, but to respect their authority over the campaign's operation.
Gold buys people
Without a readily available source of high-end useful items, you can purchase large quantities of low-end things.
For example, a hundred swords, a hundred kits of armor, a thousand man-years in soldier's wages and a dozen wagons of supplies can achieve a variety of things that a squad of powerful murderhobos can't.
A supply of gold can give (with some time and organization) a widespread network of informants that can be better than any 'gather rumours' check you can make. See Sherlock Holmes or Game of Thrones Varys for nice examples in fiction.
A band of henchmen can ensure that every night camp has multiple watchmen and a quick defensive encampment around it, as historical army detachments made at every nightfall - a dozen workers with shovels, axes and a supply of nearby trees can achieve quite a lot in a couple hours.
Gold buys services
If your desired magical device of power can't be bought, then it can likely be made. Not everything that's needed for it needs to be obtained by yourself. If it needs a McGuffin from the eastern mountains, a FooBar from southern seas and a thingamajig from the western desert, then you can go yourself for one of them, send a hired expedition (or two) of N-5 level adventurers for another, and offer a large reward (hand of princess optional) to whoever produces the third item.
What I mean, if you do have excess gold, then it is one of the instruments that you shouldn't hesitate to spend for plot goals instead of 'crunch' goals of character power.
Best Answer
You keep your unspent gold.
Remember the design philosophy of 5e "There are no hidden rules". The rules text states that you "start with [X] gold pieces", so your character has [X] gold pieces, period. It does not further expand that you lose any unspent money after character creation, and why would you? You haven't spent them (obviously), and they wouldn't just vanish into the æther after buying that last piece of rope.