Concept:
This question involves the use of prepositions to indicate the "method" or "means" by which an action is performed. When an action is followed by a gerund (an -ing verb acting as a noun), a specific preposition is required to show how the result was achieved.
Step 1: Identifying the cause and effect.
The effect is "saved my life." The cause or method is "killing the snake." We need a word that connects the result to the specific action that caused it.
Step 2: The role of "BY" as a preposition of means.
In English, the preposition "by" followed by a gerund is used to explain "how" something was done.
Example: "He earned a living by writing books."
In the current sentence, the friend saved the life by (means of) the act of killing the snake.
Step 3: Why "with" is incorrect.
While "with" is also used for tools (e.g., "He killed the snake with a stick"), it is not used with the gerund phrase "killing the snake" to show the primary method of saving. "By" is the standard grammatical choice for the "how" of a situation involving a verb.
Final Answer: Option D