**Core Concept**
The hydrostatic test, also known as the float test or water displacement test, is a method used to determine whether a newborn baby was stillborn or live-born. The test relies on the principle that a live-born baby will sink in water due to the presence of air in the lungs, whereas a stillborn baby will float.

**Why the Correct Answer is Right**
In a live-born baby, the lungs are inflated with air at birth, causing the baby to sink in water. The presence of air in the lungs is a result of the baby's first breath, which occurs at the time of birth. When a live-born baby is submerged in water, the lungs will displace a volume of water equal to their own weight, causing the baby to sink. This is in contrast to a stillborn baby, whose lungs are not inflated with air and will therefore float in water.

**Why Each Wrong Option is Incorrect**
* **Option A:** This option is incorrect because it does not provide a valid reason for a false negative result in the hydrostatic test. A false negative result occurs when a live-born baby is incorrectly identified as stillborn.
* **Option B:** This option is incorrect because it suggests that the test is not reliable in cases where the baby's lungs are not fully inflated, which is not a valid reason for a false negative result.
* **Option C:** This option is incorrect because it implies that the test is not sensitive enough to detect the presence of air in the lungs, which is not a valid reason for a false negative result.

**Clinical Pearl / High-Yield Fact**
It's essential to note that the hydrostatic test should only be performed by trained professionals, and the results should be interpreted with caution, taking into account any potential confounding factors.

**Correct Answer: C.**