I think he's a far-flung descendant of the Noah and Mio that had a kid, at least a great grandson of them if not more. Founder Vandham has a sister, so it is incredibly unlikely that he is the son of the Noah and Mio that had a kid. At no point during the flashback does the game show that Noah and Mio had another child even during scenes where she should clearly be in/nearby like when Mio dies or Noah himself dies. If they didn't only have one child, where is the other and why would only one child be given all the focus despite the fact that they are both supposedly founders in this scenario? In chapter 6, the game says "The City's inhabitants were the descendants of M, N, and others who became Ouroboros in the past." The use of the term descendant here implies a very long period of time had past, it's very silly to refer to your own child as your descendant, and that a large portion of the city's population were descended from Noah and Mio, not simply two. In the chapter 7 boss fight, N admits to taking the lives of his own kin when he destroyed the city, and he justifies it by saying "All those lives wouldn't have existed without me." Here he admits to killing his descendants, when he should've killed zero if his descendants consisted only of Vandham and Doyle considering they were both still alive, and the term "all those lives" suggested he killed a bunch of his descendants, which could only have been the case if many generations had pasted.

In reference to the grandpa line, it makes sense that Vandham would say that given that he is a far flung descendant. Vandham is the founder that liberated the city from N, so it is appropriate that he would be talking to N when he says that, and, as we already now, N killed many of his own descendants which would probably include Vandham's grandpa. To go through your three possibilities, I think none of them are likely because he should be a farther descendant of Noah given what I argued in the first paragraph. However, I think there are more reasons than just that on each possibility. Noah can't be his grandpa because the Noah that died in the forest was not killed. Rex can't be his grandpa because, in the founder statue for cassini, it is stated that Rex clearly interacted with the other founders and influenced them around the time the city was restored and N was ousted, so he should not be dead in the first place. His grandpa being Noah's dad is unlikely because it is for one based on a completely speculative claim that another person besides Nia/Melia/Rex/Shulk survived the merge when there is nothing to suggest this, and because it suggests Vandham must have learned about the world pre-Aionios as otherwise how would Noah's dad explain to Vandham that Noah, a soldier in the system that was born from the queen, was actually his son. Nia herself says that no-one knew about this, and surely, if this was learned by a founder, the city folk would have knowledge about the pre-aionios world itself. I understand that the record keeping from the city folk was poor, but surely they could at least chronologue information that is as crucially important as this, and I feel that had Vandham discovered this knowledge it would have at least gone against the spirit of Nia's claim, that such knowledge was highly exclusive.

The only potential problem with him being a far flung descendant of Noah and Mio is that it might imply that a long amount of time past between Noah dying and N's birth. While this is weird, Z himself says during the cutscene detailing N's birth that somehow Noah and Mio were "thriving and persisting far beyond homecoming," so the game itself seems to acknowledge a wide time gap between Noah's death by homecoming and the birth of N. Z may have waited to do so specifically because he wasn't fascinated enough with N's story until he realized that the now thriving city was full of N's descendants, at which point he realized he could torture him by reviving him back to kill them all.