This question is based on the Reimer–Tiemann reaction, which is a very important topic for JEE Main, JEE Advanced and IIT JEE.
When phenol is treated with CHCl3 and aqueous KOH followed by acidification, the reaction introduces a –CHO group mainly at the ortho position.
Due to intramolecular hydrogen bonding, o-hydroxybenzaldehyde is the major product, while p-hydroxybenzaldehyde is formed in smaller amount.
Hence, Statement I is false.
The o-hydroxybenzaldehyde forms intramolecular hydrogen bonding and is steam volatile, whereas p-hydroxybenzaldehyde forms intermolecular hydrogen bonding and is not steam volatile.
Therefore, the two compounds can be easily separated by steam distillation.
Hence, Statement II is true.