Step 1: Understanding the Question:
The reaction sequence involves (i) reduction with $NaBH_4$, (ii) basic hydrolysis with $NaOH/\Delta$, and (iii) acidification with $H_3O^+$. Step 2: Detailed Explanation:
1. $NaBH_4$ in $MeOH$: It selectively reduces the ketone group to a secondary alcohol. The amide group remains intact.
2. aq. $NaOH, \Delta$: Heating with aqueous base hydrolyzes the amide bond (ring opening) to form a carboxylate and an amine.
3. $H_3O^+$: Acidification converts the carboxylate into a carboxylic acid and the amine into an ammonium salt (or neutral amine depending on final workup).
The resulting structure corresponds to a substituted amino acid chain containing a hydroxy group, as shown in the answer key for Structure (2). Step 3: Final Answer:
The product is Structure (2).
