Final answer:
In this sentence, the correct form is 'llamaba' because we are talking about a girl in the past.
Step-by-step explanation:
The correct answer is D. llamaba.
In the sentence, 'Habia una vez una niña que se llamaba Caperucita Roja', we are talking about a girl in the past, so the correct form of the verb 'llamar' would be 'llamaba'.
'Llamaba' is the imperfect tense of the verb 'llamar', which is used to talk about past actions or ongoing actions in the past.
Learn more about Spanish Verb Conjugation