This is false: it has a very negative connotation.
It refers to a smile that is mocking or contemptuous (or a remark that is mocking or contemptuos) - so it's not a genuine smile, but an ironic and sarcastic smile. It has a negative and not a neutral connotation.
In my opinion the correct answer is B) Indifferent
I believe that the narrator tells his story as a casual and everyday thing, without any particular emotion.
