Help with the first blank

Source : ETS verbal reasoning

Got the second blank correct. ( oddly represents contrast and it would mean the sound was weak despite the amount of energy given).

For the first blank, I thought it would indicate something bad. Option C does no make sense. And I chose B. Is this option wrong because of the word “encouraged” or is there another logic to get the right answer?

Yes, you are right about the second blank, and that the first blank has to be negative.

We can infer from the second part of the sentence that the group’s performance was good but the setting of the auditorium was bad, causing harm to the performance. Hence, option A.