Illegal deck in small PPTQ
3) something else.
This is a straight forward example of TE-Decklist Problem.
The decklist is illegal. The first example is a player with Mana Drain in a Legacy decklist, which is like what happened here (but on a larger scale!). The fix listed is to remove illegal cards, and then allow the player to add Basics to bring it up to 60 cards.
Of course, the odds that they have a functional deck after all of this is near zero, so I'd recommend to the TO that the player be refunded their entry or something, rather than be forced to “play” on, or just straight drop. While the penalty is a Game Loss, the fix effectively ends their ability to play in the event they paid for.
As for everything else, once you start an event and have announced the 5 rounds + top 4 cut, you have to follow through on it. No take backs even if you lose someone this early!