Mary's watch isn't going, she should have it repaired.
Shoud have is a past modal verb. It is followed by a past participle. These verbs are used to show something that had a chance of happening but didn't. Other past modal verb phrases are could have and would have.
The voice is how a person expresses their idea in words. In this case, the voice was first written with an informal voice, while they are asked to change to formal.
I think the answer is number 2
