It's an odd question, but has been asked by my guild.

So we know that DKP is decayed per event. Meaning old events will start to decay while the recent ones won't yet.

My guildies have asked, when DKP is charged.. does it charge the oldest DKP first or will they still have some decay happening?

For example:

Raid A 100 DKP (now worth 50)
Raid B 100 DKP (now worth 60)
Raid C 100 DKP (Not Decayed)

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.