Taro told her the story of the magic waterfall.

**Explanation:**

The correct answer is option **'B'** - Taro. Taro is the one who told the lady the story of the magical waterfall.

**Reasoning:**

The story of the magical waterfall is about a young boy named Taro who goes on a journey to find the magical waterfall and save his village from drought. Taro is the protagonist of the story and the one who experiences the adventure.

- Option **'A'** - Taro's father: Taro's father is not mentioned in the story as the one who tells the story to the lady. He is mentioned as a character in the story, but he does not play a role in telling the story to the lady.

- Option **'C'** - Taro's mother: Taro's mother is also not mentioned in the story as the one who tells the story to the lady. She is mentioned as a character in the story, but she does not play a role in telling the story to the lady.

- Option **'D'** - Villagers: The villagers are not mentioned as the ones who tell the story to the lady. The story is specifically about Taro's journey and his encounter with the magical waterfall, so it is unlikely that the villagers would be the ones to tell the story to the lady.

Therefore, based on the information given, the correct answer is option **'B'** - Taro. He is the one who tells the story of the magical waterfall to the lady.

Correct answer is option B