(D) That Leila is shocked at what the driver of the convertible did
Incredulous is defined as being "unwilling to admit or accept what is offered as true". If we analyze the sentence carefully, we can sort of make out how she feels, but if we completely remove the word from the sentence and input something we can understand a little easier, such as:
"...incredibly surprised that he would stop traffic just to yell at another driver behind him."
We can see that it fits right in.
Lastly, look at the word itself. It has a lot in common with "incredible" which is a much more commonly used word, knowing that it means "too improbably to be believed". This is one of the best methods for finding out the meaning to words we don't know. It won't be perfect 100% of the time, but in most cases it works.