B
I'm guessing that a witch's knowledge is what causes the curse.
The things we know so far:
• The master seems cursed to see every living thing as a monster.
• Luppie is cursed to be seen as a monster by every living thing.
• Physalis is NOT seen as a monster by the townspeople (unless her disguise magic can also change not just her appearance, but also her voice from monster sounds to regular person sounds; if it can, we don't know one way or the other).
• Alba seems to be exempt from the curses.
Considering how the master called Luppie a girl when protecting her and Alba, there is a possibility that the master can see cursed people as they actually are. Then again, she may have just guessed based on the fact that Alba was protecting her, or she may have grown adept at determining the gender of the person based on the monstrous appearance over the years. The master at least seems aware that the monsters she sees aren't really monsters, based on her interaction with the random guy trying to help her before.
I'm excited to find out the answers to the mysteries, but I can definitely wait for high quality releases for the best experience.