This phase differs in only one aspect - you will be fighting with a 3-man team, meaning that you will have to add someone to your dream-team. As it was in the previous round, you can either select a character from an already available pool, or do some Ally Events to unlock new ones. If you want to unlock some new allies, go to the lottery point, where you will find a group of 4 ninjas. Just as with the previous side-quest, talk to any of them to initiate the event itself - go to "One Rowdy Training" in "Ninja World Tournament - Ally Events" for more detailed information.
You should also pay attention to new items present at the store - after the last two stages of Rank D tournament, there will new, more powerful items available there, some of which are just stronger version of the ones you are already using. You can either buy them in the shop, or check your inventory if you don't have them already (from hidden treasures, for instance).
Regardless of whether you've completed the side quest or not, go to the NPC in charge of registration (D Rank Tournament Reception) and confirm your readiness to take part in the main round of the Rank D Tournament. Just like last time, you will have to select allies to join your team - this round takes place between 3-man squads. I would strongly recommend to select fighters you are familiar with, to make the event a lot easier.
This round is divided into three parts, and in which of them you will be fighting using only one character, selected before the fight. A good idea is to take your most powerful (or the one you are most familiar with) character for the 3rd, final round, so that you can make up for any mistakes done in the previous rounds (if they occur). Just like it was before, Battle Orbs collected in one round are transferred to the second, and then to the third round. The one who collects the highest amount of orbs is the victor.
After finishing the main battle of Rank D of the ninja tournament, you will be given a choice to select one of three rewards. The choice is yours, but you should either take the third one ( if you want to have more money), or the second one (if you are into character customization) of them - the first one is useless, as the character will be unlocked with Ryo gain either way. If you, however, want to have access to that character now, you can select the first reward.
After selecting the reward you will be transferred back to the main menu, and you will unlock a new option in the Ninja World Tournament - "Mecha-Naruto Story". Besides that, the shops will get a few more interesting items. Go to the next chapter, "Ninja World Tournament - Mecha-Naruto Story" to continue.