。
She sometimes confuses fantasy with reality.
Literal
She [topic-は] sometimes fantasy [and-と] reality [object-を] confuse [sometimes happens-ことがある].
ときに is a slightly more literary or contemplative alternative to ときどき — both translate as 'sometimes,' but ときに carries a touch of reflective distance, as if the speaker is noting a pattern rather than reporting a frequency. The construction Vる＋ことがある expresses an episodic habit ('there are times when X happens'), distinct from its lookalike Vた＋ことがある, which marks lifetime experience ('have done X before'). The pair 空想 (fantasy, daydream) and 現実 (reality) is a stock contrast in Japanese, recurring in psychology, fiction, and self-help writing. 混同する (to mix up, to confuse) puts a slightly clinical edge on what could otherwise be expressed as 間違える — it suggests blurring two categories rather than just making a one-off mistake.