Concept:
The radius of curvature \(\rho\) of a curve \(y=f(x)\) is
\[\begin{aligned}
\rho
=
\frac{(1+y_1^2)^{3/2}}
{|y_2|}
\end{aligned}\]
For a circle of radius \(r\),
\[\begin{aligned}
\rho=r
\end{aligned}\]
at every point.
Step 1: Use the radius of curvature formula.
\[\begin{aligned}
r
=
\frac{(1+y_1^2)^{3/2}}
{|y_2|}
\end{aligned}\]
Step 2: Square both sides.
\[\begin{aligned}
r^2
=
\frac{(1+y_1^2)^3}
{y_2^2}
\end{aligned}\]
Step 3: Rearrange the equation.
\[\begin{aligned}
(1+y_1^2)^3
=
r^2y_2^2
\end{aligned}\]
\[\begin{aligned}
\boxed{
(1+y_1^2)^3=r^2y_2^2
}
\end{aligned}\]
Hence, option \(\mathbf{(D)}\) is correct.