Player buys an item at Raid C with 110 points. In theory their total DKP should stop decreasing until Raid C starts to decay.
Is this correct?
Nope, it will continue to decay until each event reaches it's floor.
Remember, each item decays independently. This means that the decay does not stop until every event and every item will reach it's floor (if you set it to 25%, it'll stop there). This means that you can decay into the negative.