Cdnandtrini, you assumed correctly from what I am reading that his wife is the sponsor.
The OP's wife cannot be currently on social assistance other than the mentioned list. However sometimes CIC may deny her ability to sponsor due to the fact that she was on social assistance for the past 12 months. This is why they asked for option c print out which will tell CIC this. This is the sticking point.
Some have been able to continue with their sponsorship when they submitted their application a month after getting off welfare. Others have not been so lucky and had to wait 12 months of welfare free before applying again.
I think they are okay to send in their application since they are no longer on social assistance. What's the harm in sending it in now. If it get rejected due to not meeting the 12 month welfare free, they can reapply in 8 months when they hit the 1 year welfare free mark.
Screech339