Question

Change the verb to indicate that it is an activity that is currently in progress using the correct form of Estar in Blank 1 and correct form of action verb in Blank 2.

Ella habla inglés con su familia.

Answer 1

I think that the two blanks are in the following positions:

Ella BLANK1 habla BLANK2 inglés con su familia.
the first blank will be filled with "está" - 3rd person singular because "ella" is also 3rd person singular.

the second blank will be filled the gerund of "hablar" - hablando. (just add "ndo".

so the whole sentence will be
Ella está  hablando inglés con su familia.