The answer is (D): Gladys looked cheerful when she heard the encouraging news. For A, B and C, the blank slot is a word that modifies the verb -- an adverb that describes the manner in which the action was done. Adverbs have an -ly ending, so that "talked cheerfully", "participated cheerfully" and "laughed cheerfully" would be the correct answers for A, B and C. For D, "looked" is a different sort of verb: Gladys is not the person looking, "looked" is really just equivalent to "was". So, in D, the blank slot is a word that describes Gladys -- an adjective with no -ly ending, like "cheerful".
