**Core Concept**
Dermoid cysts are a type of benign, encapsulated teratoma that contain a mixture of skin, hair, teeth, and other ectodermal and mesodermal tissues. They can occur in various locations, including the scalp, face, and neck, and are often found near the midline.

**Why the Correct Answer is Right**
When a dermoid cyst ruptures, the contents can spill into the surrounding tissue, causing an inflammatory response that is characteristic of foreign body reaction. This is because the cyst contains desquamated skin cells, hair, and other debris that can be perceived as foreign by the body's immune system. The resulting inflammation is typically of a foreign body type, with the presence of acute inflammatory cells, granulomas, and sometimes even a foreign body giant cell reaction. This distinct inflammatory response is a key feature of dermoid cyst rupture.

**Why Each Wrong Option is Incorrect**
**Option A:** Dermoid cysts are typically lined by squamous epithelium, not columnar epithelium, which is more characteristic of other types of skin appendages.

**Option B:** Dermoid cysts often contain hair, among other skin and mesodermal elements, so this statement is incorrect.

**Option C:** The most common site for dermoid cysts is actually the ovary, not the median angle of the eye. Dermoid cysts can occur in the face and neck, but the median angle of the eye is not a typical location.

**Clinical Pearl / High-Yield Fact**
A key aspect of dermoid cyst diagnosis is the presence of a combination of skin and mesodermal elements, including hair, teeth, and bone. This mixed tissue composition can help distinguish dermoid cysts from other types of skin tumors or cysts.

**✓ Correct Answer: D. Rupture is associated with foreign body type inflammation**