**Core Concept**
Diffuse calcification of the pancreas, also known as pancreatic calcification, is a condition characterized by the deposition of calcium salts within the pancreatic tissue. This phenomenon is often associated with chronic pancreatitis, where repeated episodes of inflammation lead to fibrosis and calcification.

**Why the Correct Answer is Right**
The correct answer is related to the pathophysiology of pancreatic calcification. In diffuse calcification, calcium ions bind to phospholipids and other molecules in the pancreatic tissue, resulting in the formation of calcium soaps. These calcium soaps are then deposited within the pancreatic parenchyma, leading to the characteristic calcification seen on radiographic imaging.

**Why Each Wrong Option is Incorrect**
**Option A:** This option is incorrect because calcium lies within the pancreatic ducts in chronic pancreatitis with main duct obstruction, not in diffuse calcification.
**Option B:** This option is incorrect because calcium lies within the pancreatic pseudocysts in pseudocystic pancreatitis, not in diffuse calcification.
**Option C:** This option is incorrect because calcium lies within the pancreatic tissue in focal calcification, not in diffuse calcification.

**Clinical Pearl / High-Yield Fact**
It is essential to differentiate between diffuse calcification and focal calcification in the pancreas, as they have different underlying pathologies and clinical implications.

**Correct Answer: C.**