It's the first one (adjective)
It kinda all depends on the perspective on the way that you look at it. When reading pull out the main ideas about what you may think the author is trying to set forth.
A prepositional phrase is such a phrase which begins with a preposition (on, under, over, etc) and ends with a noun, pronoun, gerund, phrase etc.
So here, the correct sentence will be "On the stage the members of the orchestra began to tune their instruments".
