I was happy playing the piano (gerund or participle?)

In the sentence, “I was happy playing the piano,” is the phrase “playing the piano” a participial (Playing the piano, I was happy) or a gerund with an elided, or assumed, preposition (I was happy [with] playing the piano)?

Thank you!

Solution 1:

I was happy [playing the piano].

Trad grammar would probably call "playing" a present participle, but modern grammar doesn't distinguish gerunds and present participles, simply lumping them together and calling them 'gerund-participles'.

In which case, "playing the piano" is a gerund-participial clause functioning as an adjunct (adverbial) in clause structure.

It means "I was happy while I was playing the piano".