Answer is correct.
D. a private DNS zone named privatelink.database.windows.net
The private link resource type is a SQL database, therefor the recommended private DNS zone name is privatelink.database.windows.net.
Source:
https://learn.microsoft.com/en-us/azure/private-link/private-endpoint-dns#azure-services-dns-zone-configuration
windows.net is an Azure infrastructure domain. Creating private DNS zones containing this name may have unintended consequences for DNS resolution for services deployed in your virtual networks.
As the documentarion says "To configure properly, you need the following resources:"
1.- Client virtual network
2.- Private DNS zone privatelink.database.windows.net with type A record
3.- Private endpoint information (FQDN record name and private IP address)
Reference: https://learn.microsoft.com/en-us/azure/private-link/private-endpoint-dns#virtual-network-workloads-without-custom-dns-server
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