From my understanding induced drag is highest when at high weights and at low speed clean configuration. - more time for the vortices to develop
The answer given is VSO (Landing configuration)
when in the landing configuration with gear down - more profile drag and flaps will be down too with the centre of lift moving inwards form the wing tips...

You are correct in your reasoning but VSO is the stalling speed in the landing configuration, and that is substantially slower than the other 3 options. The lower speed more than compensates for the reduction in the flow around the tips from the other factors.