B
Time stops during missions.
I can't find any citation indicating that time stops during a mission, but from my memory of playing through the game several times I feel pretty confident saying that it does.
This would be easy enough to check. Save, start a mission, see what time it is when you get there, play some turns, leave, check the time.
But not when flying to the mission site.
But in this version of X-Com, you don't have much control over your aircraft. The skyranger will fly to the site, taking up time, and fly back when it's done, without you being able to stop it and send your interceptor.
So check.
This means that maybe you can do the mission first, and maybe not. To be sure, save the game, head to the mission site, leave immediately, and return to base. If you can still intercept the UFO, then you're fine doing the mission. Load, and actually do it.