A: I actually like Jack's hair _now that_ he had it dyed pink
B: You're pulling my leg, aren't you?
To me, none of the other choices "feel right" in the sentence as given. I realize that this sort of answer, based as it is on the intuition of a native speaker, may sound pretty nebulous, so a partial explanation follows.
The phrase "in case" is usually used to mean "in the event that." For example, "He took an umbrella _in case_ it rained." But that sense doesn't look like it's present in the exchange as given, so (B) can be eliminated.
The phrase "what if" is usually used as part of a question. Since the exchange as given does not include a question, (C) can also be eliminated.
And for "despite" to work in the exchange, it would need to be followed by "the fact that" as in "I like Jack's hair despite the fact that he had it dyed pink."
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