Is one required to prostrate upon encountering the word "Sujūd" (prostration) that is underlined, or after completing the reading of the verse, and is it permissible to prostrate while sitting, or is standing required for it?

The prostration of recitation (sujud al-tilawah) is a Sunnah, not an obligation, according to the majority of jurists. Its place is at the end of the verse containing the prostration. One is not required to stand up for it. If the reciter is standing, he prostrates, and likewise if he is sitting.