Could you say "Ŝi estas kudranta ĉemizon"?
You could, but compound tenses are unnecessary 99% of the time.
I got an reply saying the answer should be Bluzon.
Is this another word for shirt?
"Sort of, but not really" - bluzo (bluz·o )is a blouse.
I did too, but it was because i cannot read and i mistook it for 'skirt'