You were absolutely right to choose option c), and, in my view, should impugn the decision of whoever may have declared b) the right option.
The word found is a passive past participle of the verb find and, therefore, categorially speaking, it is itself a 'verb'. It is true that some participles have homonymous adjectives (e.g., interested, interesting), but found is not one of them, and, even if it were, when followed by an adjective (dead, here) it cannot be anything but a 'verb'; in such [ ...__A...] contexts, found cannot be an adjective at all. [I asume you are interested only in the first token of found, the one in bold face, and what follows applies only to that instance of found, but, as a matter of fact, the second found of your sentence is also a passive past participle, and, again, 'verbal', not adjectival].
The proof is simple; it rests on just two solid facts: a) in this construction, the adjective dead must, in its turn, be analysed as a 'secondary predicate', an 'attribute', a 'complement' or a 'post-modifier' depending on the head found (there have been different analyses of the "find x Adjective" construction), and b) in English, no adjective is allowed to take another adjective as its 'secondary predicate', 'attribute', 'complement' or post-modifying 'adjunct' (which of those functions is attributed to the second adjective does not matter for current purposes).
In case you are skeptical about the latter claim, let me explain it a bit: of course, in English two adjectives may form a single syntactic constituent, as in pale blue (shirt), where pale and blue jointly constitute a single adjectival modifier of shirt, but in such cases it is always the first adjective that modifies the second, never the other way round (i.e., inside the [A+A] constituent pale blue, it is pale that modifies blue, not viceversa; that's why pale blue is a kind of blue, instead of a kind of pale-ness).
On the other hand, English also allows sequences of mutually independent pre-nominal adjectives, as in big round blue eyes (where multiple standard constituency tests show that big, round and blue do not constitute a unitary syntactic constituent), but, in such cases, by definition, none of the adjectives can act as a complement or adjunct (etc.) of any other; they are just different syntactic constituents each separately modifying either eyes (under a 'flat' 'Davidsonian' analysis of modification), or a 'nominal phrase' headed by eyes (under a binary branching 'Fregean' one).
Adjectival phrases formed by two adjectives such that the second adjective is a 'dependent' (whether a 'complement' or an 'adjunct' is inmaterial for present purposes) of the first one are simply impossible in English (although normal in Spanish and other Romance languages, obviously), and yet that is exactly what we would have to say if found were analysed as an adjective in the example under discussion.
In sum, although 'participles' (and not only passive past ones, active present ones, too) were so called in traditional grammar precisely because they seemed to 'participate' of verbal and adjectival properties (in particular, they could occur in __ N or N __ contexts where the __ slots were typically occupied by adjectives), they are always, and above all, the participial forms of verbs, and so never lose their verbal character. In the case of found, to stick to the example we are discussing, that verbal nature is manifested by its capacity to take as a complement the same adjectival secondary predicate that the corresponding finite base verb find takes in The boys found the whale dead.
Note that it is that capacity of found to take dead as its 'dependent' (not its also being followed by a place adverbial!) that proves crucial to establish its verbal, and therefore non-adjectival, nature. I insist on this because, although Tim Osborne has said above that "The verbal quality of found is also visible in the fact that true adjectives can not[emphasis mine] be modified by adjuncts such as on the southern Spanish coast,<...>", that statement is, simply, not true. On the contrary, many unquestionable adjectives can be modified by place (and, of course, time) adjuncts (cf. That was a kind of whale (extremely) rare/common/frequent/abundant/valuable/dangerous/aggressive....on the southern Spanish coast/a generation ago/until recently). As a consequence, the fact that found is followed in our example by a place adjunct does not by itself suffice to establish its verbal nature, as many adjectives can also be followed by comparable place (or time) adverbials. And, again pace Tim Osborne, neither is the post-nominal position of found ... coast an argument for the 'verbal' (here = non-adjectival) status of found, because adjectives may take complements (and modifiers) of their own, and whenever they do, they must be post-nominal (cf. A student of mine keen on cryptography told me that ..., vs. *A keen on cryptography student of mine told me that...). What does supply the crucial proof that in this case found is a 'verb' (in participial form, but still a verb) is the fact that it is followed by a dependent adjective, a construction that would be ungrammatical if found were itself an adjective, as already explained.