If one were to observe the activity of methylated DNA, it would be expected that it would?

It would be replicating. DNA is usually ociated with histones, which are positively charged. Since DNA is negatively charged, it is usually tightly packed with histones. When the DNA is methylated, the negative charge is neutralized, and the DNA unwinds. This only occurs during DNA synthesis. DNA doesn't make protein, RNA does, so anything involving protein synthesis or translation can be ruled out. Also, methylated DNA would not turn off transcription, it would allow transcription to occur. So you're left with A.