What is the right course of action?

You answered correctly.

The intersection is marked with a "priority road" sign for the cross street, which means you have to yield to traffic coming from the right and left, in this case the motorcycle. The bus is on your left and does not have priority over you, since you are coming from its right once the priority from the motorcycle is respected. So, you must allow the motorcycle to go first, then you proceed before the bus. That’s why answers 1 (allow the motorcycle to pass through) and 2 (you take priority before the bus) are correct. This follows the German “right-before-left” rule unless indicated otherwise by traffic signs.