200NL Ethics Question

[AsydRayne]

This isn't exactly a strategy question, but I'm not sure the best forum to post this in, so if Mods want to move it, feel free.

Live 1/2

UTG is a loose agressive gambler and has $120
CO is a slightly loose but decent player with $250
I cover
UTG raises to $20 CO calls $20.
I have AQo OTB and make it $120.
UTG says, I'm going to make a really bad call because I won with this hand earlier. He calls, CO folds, and I say, AJ, right? He says yup.

As he's forcefully flipping his cards, one flies off the table and onto his chair. He finds the card, but the dealer calls the floor. I tell the floor I'm happy to let him play, but the floor rules his hand dead. The dealer shoves me the pot.

The CO, who didn't like me, starts making a big stink about it, saying I should give him his money back, etc. I ask the dealer if he can deal us out the cards, and he says I'll show you the flop. He deals out the flop which is J high rainbow and then immediately mucks the cards without showing the turn or river.

So, what should I do in this situation?
A) Keep all the money because he should have kept control of his hand.
B) Treat it like the guy folded and give him back $100 and keep the rest.
C) Give him back his pot equity after the flop: about $240
D) Give him the whole pot since he probably would have won: $255
E) Something else?

I made a decision that I thought was right at the time, but now I think I was biased due to disliking the CO, and being down for the night. I think I would have done it differently if I was up.