The correct option is D While he watched a horror movie
An adverb clause is a group of words containing a subject and a verb,
and it functions as an adverb, by modifying an adjective, verb or an
adverb. Adverb clauses generally begin with a subordinate conjunction
(since, because, while, etc.)
Generally, while expanding an adverb
phrase to a clause, the subject is added and the present participle
(verb + ing) is changed into a verb. (If there is an auxiliary/helping
verb required, it is added.)
The underlined words form a phrase, it has no subject. Hence the sentence needs to be changed and option A is
incorrect.
Option D is correct because the subject "he" is added
and the verb "watched" replaces the present participle "watching".
Option B is incorrect because it's still a phrase.
Similarly, option C is incorrect because it is still a phrase.
Note: An adverb phrase may or may not contain an adverb, as long as it functions as one.