For me, based on the overall structure and what I perceive to be the intended focus of the sentence, it is a third option:
In the final sentence, you have:
1) Two simple sentences:
John was waiting for Tammy. Tammy was waiting for Jim.
2) The coordinating conjunction 'while' links (coordinates) the timing of the two events and can be used without a comma to create a compound sentence:
John was waiting for Tammy while Tammy was waiting for Jim.
3) The adverbial phrase 'in the tavern' is subordinate to the two main clauses and can be placed either at the beginning or the end of the final clause. Placing it in the middle of the compound sentence requires commas to demarcate it:
John was waiting for Tammy while, in the tavern, Tammy was waiting for Jim.
If I placed the adverbial phrase at the end of the sentence, I would use a comma after the first clause, though. The second part of the sentence has become subordinate to the first part, providing more detail about when John was waiting and could be moved to the start of the sentence to achieve a different effect:
a) John was waiting for Tammy, while Tammy was waiting for Jim in the tavern.
b) While Tammy was waiting for Jim in the tavern, John was waiting for Tammy.