。
She can write letters in English.
Literal
She [topic-は] English [in-で] letter [object-を] write thing can-do.
で here marks the language as the medium of writing — the same particle used for tools, methods, and means generally. ~ことができる is the periphrastic potential, somewhat more formal than the simple potential 書ける. Both forms coexist; ~ことができる is at home in writing and announcements, while in casual speech 英語で手紙が書けます would be more economical. The shift from を to が when moving to the simple potential is the standard pattern for potentials — the underlying object is promoted to subject.