Here’s the completed dialogue with the correct forms of the verbs in brackets:

Bill: Hi Liz! Where are you?
Liz: I'm in my aunt's flat.
Bill: What (1) **are** you (do)?
Liz: I (2) **am working** on a school project. I (3) **am getting** some information from the Internet. What (4) **are** you (do)?
Bill: I (5) **am hanging out** with Ben, We (6) **are shopping** at the shopping mall. Do you want to see a film?
Liz: Sorry, I'm busy.
Bill: Star Wars is at the Rex cinema. Come and join me.
Liz: I'm sorry, I can't. I (7) **am babysitting** for my niece and then we (8) **are making** pizza.
Bill: Ok. See you at school tomorrow. Bye!
Liz: Bye, Bill.