Step 1: Approach
Make the equation polynomial in $y'$ and $y''$ in two steps.
Step 2: Steps
Squaring removes the outer radical and the $\tfrac32$ power turns into $3$. The fraction $\dfrac1{(y')^2}$ is cleared by multiplying by $(y')^2$.
Step 3: Resulting form
$(y')^2+1=(y')^2(y'')^3$. It is a polynomial. The highest derivative is $y''$, giving order $2$, raised to power $3$, giving degree $3$.
Step 4: Answer
Option (B).
Final Answer:
After clearing the roots the highest derivative is of order 2 and has power 3, option (B).
\[ \boxed{2,\ 3} \]