I recommend the first option which is the default option. All the files will be contained within a .dmg archive file which you access by opening the .dmg file. It also makes it much easier to move those files (actually the whole .dmg archive file) to another location if you wish and it makes deleting the old data easier once you have copied those files to your own user folder.
Leaving the older user folder intact can lead to confusion later on if you never delete the folder, but that is your choice in whether to choose the second option.
The third option will remove the user account from the system and delete all data within that user's home user folder as well so you don't want to choose the third option if you want to retain that data on your Mac, otherwise you will need to re-transfer the data either using a USB hard drive/SSD or by sharing files/folders of one of those computers.