sadly you have to undergo this problem due to legal documents. however i would not have suggested to go for adverse possession. i was your property and the documents could have been misplaced and you could have proved your case by circumstances and the records available like photographs, tax documents etc.
the case of c is very weak and a good advocate would anyhow sail you through. you will get the possession ultimately or it will remain disputed for long and the c will come to you for settlement. you can do one more thing by offering him a reasonable amount if he leaves the property and gives the documents to you. this way you will save years of litigation tension and lawyers fee and other expenses besides mental harassment.
answer 1. i hope you claimed ownership also but anyway adverse possession is also a sufficient point to help you and you must be having a good case.
answer 2. khata etc do not create right in the property therefore dont worry about that. yes you can get the encumbrance registered in those khata etc. yes it will prevent further fraud. you can also move application in the court to direct them not to create third party interest. add the other departments as party and when they will come they will note that the property is disputed and you will get the work done easily. you can also move application in court to get the notice affixed on the property that this property is under dispute. you can install cameras on your property so that everything is checked.
i hope i have replied to your satisfaction. good luck