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Option 1: The founders of the dynasty that ruled Arcot were Daud Khan Panni and Sa’adatullah Khan.
This statement is correct. Daud Khan Panni and Sa’adatullah Khan were indeed the founders of the dynasty that ruled Arcot.
Option 2: Arcot became the site of a protracted struggle between the English and Dutch East India Companies from the 1740s.
This statement is correct. Arcot did become the site of a prolonged struggle between the English and Dutch East India Companies starting from the 1740s.
Option 3: Decentralization was a key feature of the State of Arcot in the 18th century.
This statement is not mentioned in the question and there is no information provided to support or refute it. Therefore, we cannot determine whether it is correct or not based on the given information.
Option 4: The other major State to emerge in South India at this time was Mysore.
This statement is correct. Mysore was indeed another major state that emerged in South India during the 18th century.
Based on the given options, the correct answer is option 2, which states that options 1, 2, and 4 are correct.