But why not gracious?

She was too reserved to be an enthusiast "truly"

D is correct and implied from the sentence

I didn't understand why D is not correct

Answers:
(I): Cordial (c)
(II): Ebullient (d)

(I) "Although usually warm and (i)_____ in greeting friends..."
The wording here implies that the answer to (I) should be synonymous with, or at least complement, "warm" in the context of social interactions. It should not be mutually exclusive with being reserved.
a) Restrained - This word does not fit the implied meaning, as it directly detracts from the warmth of a greeting.
b) Dismissive - Fits the definition even worse. A "warm and dismissive" greeting would be a rare kind of snark that doesn't fit the rest of the sentence.
c) Cordial - A more common synonym is "polite." This fits the meaning we're looking for.

(II) "... Lauren was too reserved ever to be truly (ii)_____."
The word that fits (II) should likewise fit with "warm" social interaction, and be negated by reservedness.
d) Ebullient - I had to look this word up after the fact. It means cheerful and full of energy. This best fits the meaning we're looking for.
e) Gracious - While this word fits our first requirement, it is entirely possible to be very reserved and yet still quite gracious.
f) Convetional - I think this is a typo, and should be "conventional." This word is almost entirely unrelated to either warmth or reservedness.