Final answer:
The suitable word to complete the sentence is 'that' which serves as a demonstrative adjective in this context.
Step-by-step explanation:
The correct phrase to use when indicating a specific movie that you enjoy would be 'That movie is one of my favorites of all time.' The word 'that' is an appropriate demonstrative adjective pointing out which movie you are referring to. In contrast, 'it' is a personal pronoun that is typically used to reference something previously mentioned or easily identified in context, which does not fit the sentence's structure since the movie hasn't been identified yet.