Take a look at the sentence again:
While Karen was cleaning green peppers at the sink, Chris __________ a long,
fat anchovy onto the pizza, camouflaging it with sliced mushrooms and onions.
Chris put the anchovy on the pizza. Thus, you need a form of lay. Since the sentence is past tense, you need the simple past form. Consult the table below or review the rules.
Layed, the choice you made, is a spelling error.
Infinitive | Definition | Simple Present | Simple Past | Past Participle | Present Participle |
to lay | to put something down | lay(s) | laid | laid | laying |
to lie | to rest or recline | lie(s) | lay | lain | lying |