Cheerful: sad or depressed
sat: stand
up: down
straight: curved
improper: proper or acceptable
worse: better
best of luck!
This suggests that the writer belivies, or want to believe, that dragons could be real or were real.
Since a participle takes the form: verb + -ing, the only word in this sentence which has such a form is B, 'challenging'. 'Puzzle' is a noun, 'crossword' is an adjective, 'created' is a verb.
