The correct conjugation of "bailar" in the sentence "Ellos están..." is bailando.
Here's why:
* Ellos means "they" and is a plural subject.
* Están is the present tense of the verb *estar* (to be), indicating they are in the process of doing something.
* Bailar means "to dance," but we need the gerund form to show continuous action.
Therefore, the complete sentence is: Ellos están bailando.