Step 1: Identify the specific form of Shiva as a musician. This form is known as Vinadhara Dakshinamurti, or "the carrier of the Veena."
Step 2: Analyze the options based on this iconography.
(A) and (C): Both describe Shiva holding the 'veena', the traditional stringed instrument associated with this form. He can be depicted either sitting or standing. These are correct descriptions.
(B) The 'Damaru' (drum) is iconographically associated with Shiva as Nataraja (Lord of the Dance), not Vinadhara.
(D) The 'Sitar' is a much later musical instrument and is not part of traditional Hindu iconography for Shiva.
Step 3: Combine the correct descriptions. The iconography of Shiva as a musician is correctly defined by him holding a veena, in various postures. Therefore, (A) and (C) are the correct choices.