I count mostly as:
D) I do not feel comfortable with lying, yet I feel the blunt truth can hurt people
I think there's a distinction between lying to other people, and lying to yourself. I never lie to myself, I think that's completely wrong and harmful. But I have to lie to other people, either overtly or by omission, when telling the truth would endanger my safety, or prevent me from buying the things I need for my hobbies. There's also a difference between lying to business's and lying socially.
I think lying can be kind of caustic, so there has to be good reason to do it. Lying should be treated like knives, handled safely, kept sharp, to the point, used as tools, and then put away in a safe place when they're no longer needed. I don't believe its good to lie to cover up a mistake or an embarassment, to do that just shows the other person that your not very emotionally evolved. I also feel it's also wrong to lie in relationships, because lying to protect your partner's feelings, feels to me like lying to myself. If your partner can't handle the truth, then you're not in a good relationship.
It would be great if we lived in a world where people didn't need to lie, but we don't. We live in a world where peoples minds are segmented into rigid categories. So this makes communication difficult, because if you tell the truth, then you get pushed into a box where further communication becomes impossible. So lying is a necessary part of good communication skills, especially the further your life is from the accepted social norms.
The most important thing to do when lying, is that you have to be completely accepting of your need to lie before hand, and already have your lie prepared, so you're not put on the spot when the ackward questions come up. Then you have to believe the lie yourself while you say it, as this makes it sound like you're telling the truth, instead of sounding shifty like your lying. If you're lie doesn't work, you have to have additional back-up plan consitant with the lie you already told. So it really is like becoming a character in a play. My partner tells me that I'm quite good at it, but that's because I practice thoughly before I'm put in a situation where I have to lie.
But just blanket lying to other people as a matter of habit, I find distasteful. In my personal life I would rather have a few friends I can be completely honest with, then be friendly with lots of people but have to lie to them. Although with friends for somethings, it's better to just have areas where you don't discuss, and respect each others privacy. Instead of sticking your nose where you're not wanted, and putting your friend in a situation where they have to choose between offending you, or lying to you.