The correct option is
B I love dance.
Few words can be used as both nouns and verbs. When a word is used as an action word, it is called a verb. When a word is used as the main subject of the sentence, it becomes a noun.
Here, we have to find out a sentence, where 'dance' is used as a noun. Hence, 'dance' should be the subject/object of the sentence and not an action.
Option A - 'I dance' is a wrong choice. Here, the subject 'I' does an action 'dance'. As 'dance' is an action here, it is a verb and not a noun. Hence, option A is incorrect.
Option B - 'I am dancing' is a wrong choice. Here, the subject 'I' is doing an action 'dancing', hence, it is a verb. Hence, option B is incorrect.
Option D - 'I dance well' is a wrong choice. Here, the subject 'I' says that he does an action 'dance' in a good way 'well'. Here, 'dance' is a verb. Hence, option D is incorrect.
Option C - 'I love dance' is the right choice. Here, the subject 'I' says that he does the action of 'love' for 'dance' (object). Here the word 'dance' is an object and not an action, hence it is a noun. Thus option C is the correct answer.