If he were here, it could be more fun
This statement was referring to a third singular person. This means that, the event was fun. But the fun could have been more if that person was present.
''It could'' as used in the statement is a probability. There is no assurance that the presence of that particular person would bring more fun.Â
Option A is the correct option.Â

He did not show up and so the occasion lacked much fun

 Meaning there was fun, but it wasn't much fun because he wasn't present.