inside

'in the group' or 'with the group'

Inside the group makes it sound as though they have him surrounded! As though he is in the middle and they are all standing in a ring round him.

Thank you very much for your explanation.
No, he isn't surrounded by them.
The problem is that there aren't "in" or "with" options. I can choose from "in front of", opposite, next to, near, over, under, inside, outside. I think that "next to" or "near" are possible or maybe "outside".

That's hard then. He is not part of the group, so it could be any of 'in front of, opposite, next to, near. It could possibly be outside, yes, but I suspect that is not what they are looking for. As so many of the other options are valid if we assume that he is not part of the group, I wonder if actually this is just a very badly worded question and they do want 'inside' to mean that he is part

To sum up
The picture shows a group of people and Joe is among them (but he is not surrounded by them) He is not standing in the centre of the group but on the edge. He is not standing on the sidelines (for example 2 metres from the group), but they all forms group and Joe is a part of it

I don't think any of the options describe that situation.

I think you are right. Thank you very much for your reply.