The word 'forever' does not occur in the Greek text of the verse in question. Translations into various languages are better if they stick to the actual Greek words used, so version 'A' is the better one - '...whoever lives by believing in me will never die...'
Jesus often made astonishing statements that stopped people in their tracks. He did that deliberately. This is one of them.
What could he possibly have meant? Martha's brother, Lazarus, HAD died despite having faith in Jesus. He was a beloved friend of Jesus, who wept bitterly at news of his friend's death (John 11:35). The sense of that, in the gospel account, is that Jesus was really angry at the death of Lazarus. However, don't forget that Jesus said "This sickness will not end in death. No, it is for God's glory so that God's Son may be glorified through it." (John 11:4) Jesus was not referring to any future 'rapture'. He knew that God would be glorified within the day, and that he would be the means of a miracle of grace that would result in many people putting faith in him as the Son of God (John 11:42-45). That, in turn, would lead to his enemies acting to get him killed (John 11:46-53), which was the whole point of his mission to earth - to die sacrificially. This event has nothing to do with any 'rapture' in the distant future.
Martha believed in the day of judgement and resurrection, when the departed spirits of the dead would be clothed in resurrection bodies to receive their eternal reward or punishment. The rabbinical schools of Shammai and Hillel back then taught this, and when Jesus recorded his warning about hell in Luke chapter 16 he agreed with that belief which has, as one bases, Ecclesiastes chapter 12 - at death the spirit returns to God who gave it, and the person has to account for how they lived in the flesh. This means that Jesus, Martha, and many other Jews (though not the Sadducees) knew that physical death only meant the death of the body, and not of the eternal part that lives on after death.
This is where your 'Point Y' collapses, because the New Testament states that physical death is the 'wage' all sinners receive for their sin. "For the wages of sin is death, but the gift of God is eternal life in Christ Jesus our Lord." (Romans 6:23) We have all built up a body of sinful works throughout our lives, and we will be paid by God for that, with death. Physical death must come to all sinners. The grave must claim them. That is why although Jesus gave himself over to death despite never having sinned, the grave could not claim him but had to give him up. Jesus' resurrection on the third day was proof that he was, truly, the Son of God (Romans 1:1-4).
But here is the miracle of grace Jesus enables: those who have faith in Him as the Son of God will never die, even though their physical bodies die. Their spirit lives on, returning to God, and then receiving a resurrection body on the day of judgement, but because they have passed over from judgement to life because of believing in Jesus, they will live forever in glory. That is why Jesus said just before the death of Lazarus that his sheep listen to his voice "and I give them eternal life and they shall never perish. No-one can snatch them out of my hand. My Father, who has given them to me, is greater than all; no-one can snatch them out of my Father's hand. I and my Father are one." (John 10:27-30)
This is what "will never die" in version 'A' means. Despite the body having to die, physically, the person remains alive, in Christ, and will never die spiritually, because they have faith in Jesus Christ being the Son of God who died for their sins.
Josephus' Discourse to the Greeks Concerning Hades