These modal verbs (should/might/could/would/had to) in indirect speech are changed to (shall/may/can/will/must) in direct speech.
Example: She said that she could speak ten languages. (Indirect Speech)
She said, "I can speak ten languages". (Direct Speech)
The following things in the sentence should change when changed from Direct speech to Indirect Speech:
'That' will be removed from the sentence and inverted commas will be introduced.
'He' will be changed to 'I'.
'Would' will be changed to 'will'.
Therefore, the correct answer is option (b): Harry said, "I will not be in town on Friday".
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