Rewrite the sentence in direct speech.
She said that she would be playing with her kids.

Correct option is D

The conversion from "she would be playing with her kids" in indirect speech to "I will be playing with my kids" in direct speech correctly reflects the future continuous tense. This tense is used to describe an action that will be ongoing at a specific time in the future.
Rule of Conversion: Future continuous in the past (would be playing) becomes future continuous (will be playing) in direct speech. Pronouns change from third to first person to reflect the speaker’s perspective in direct dialogue.
Example: She said she would be working -> She said, "I will be working."