Relative pronouns are the pronouns that are used to introduce the
dependent clause in the sentence. It can be for either the object or the
subject.
Here, in this question, the relative
pronoun with which we are supposed to fill the blank should correctly
represent the object ("book"), which is the antecedent word.
Thus the most appropriate word from among the options is "that".
The relative pronouns used for objects are: "which", "that", "whose".
"when" is used to refer to time. Thus it is inappropriate for use here, and this eliminates option A.
"who" is used to refer to a person. Thus it is inappropriate for use here, and this eliminates option B.
"where" is used to refer to a place. Thus it also is inappropriate for use here, and this eliminates option D.
Therefore the complete correct sentence is:
You're reading the book THAT I wanted to read.
*Note: Here in the sentence we can drop the relative pronoun and the sentence would still be correct, because here the relative pronoun represents the object of the sentence and not the subject.
But in formal language, it is better if it is not dropped.