Nalini says (1)/ she is living in Chennai (2)/ since 1991. (3)/ No error (4)

Answer

2

Explanation

has been living will replace is living because- since (Prep,) indicates a particular time or event in the past until the present, or in that period of time. It is used with a Perfect Tense.
Here, Present Perfect Continuous Tense will be used.
Look at the examples given below:
We.ve been waiting here since two o.clock. I haven.t played basketball since I left college. Hence, She has been living in Chennai Is the right usage