What would be the likely indication on the VOR for the below question?

The answer given on the textbook is figure 2. But How can the Needle be centered if the aircraft is not on the radial?

The aircraft is on a radial. Just not the one marked on the diagram.

Notice that figures 1, 3, and 4 all have heading 210° dialed at the top of the instrument. However, figure 2 has heading 120° selected. Since the needle is centered with a "TO" indication, this indicates that the plane is on the 300° radial (the reciprocal of 120°). In other words, the plane is northwest of the VOR, which matches with the diagram.

Perhaps a graphic can help you. See the picure. The ac is flying with TO indication (radial 120 selected) in a FROM area. This shows that number 2 is the correct answer.

You can rule out 4 straight away - it is flagged as Off.

It is worth noting that the horizontal marker blips on a CDI represent 2 degrees when tracking a VOR (the first 2 degrees being the edge of the central circle).

So with that in mind number 1 indicates something like 5 degrees right of track, which would put you on the 215 radial from the VOR. The image clearly does not show an aircraft on the 215 radial.

A similar picture for 3 showing 8 degrees right of 215 radial to the VOR which would make the aircraft on about the 022 radial - again clearly not the case.

So that just leaves 2 which as the other answer correcty says matches the picture.