The correct option that affects the terminal voltage of a DC shunt motor is c) Compensating winding.

A DC shunt motor consists of a field winding connected in parallel with the armature winding. The field winding is connected to a constant source of voltage, typically a DC power supply. The armature winding is connected to the load and produces the mechanical power output.

The terminal voltage of a DC shunt motor is the voltage measured across the armature terminals. It is influenced by various factors, and one of these factors is the compensating winding.

1. **Armature reaction:** Armature reaction is the magnetic field produced by the armature current that interacts with the field flux produced by the field winding. This interaction leads to a distortion of the field flux and can affect the terminal voltage of the motor. However, armature reaction does not directly affect the terminal voltage.

2. **Source voltage variations:** Variations in the source voltage can affect the terminal voltage of the motor. If the source voltage decreases, the terminal voltage will also decrease, and vice versa. However, source voltage variations are not the correct option in this scenario.

3. **Compensating winding:** A compensating winding is an additional winding connected in series with the armature winding. It is wound in the opposite direction to the armature winding and is placed in the pole shoes of the motor. The purpose of the compensating winding is to counteract the armature reaction and maintain a more stable field flux. By counteracting the armature reaction, the compensating winding helps to regulate the terminal voltage of the motor. When the armature reaction causes a drop in voltage, the compensating winding produces a voltage in the opposite direction to compensate for the drop. Conversely, when the armature reaction causes an increase in voltage, the compensating winding produces a voltage in the same direction to limit the increase. Thus, the compensating winding plays a crucial role in maintaining a stable terminal voltage in a DC shunt motor.

Therefore, the correct option that affects the terminal voltage of a DC shunt motor is c) Compensating winding.