To finish your work:
$\frac{x^2+2x+1 + y^2}{1-x^2-y^2 - 2iy}$.
But $|z| = x^2 + y^2 = 1$
So $\frac{x^2+2x+1 + y^2}{1-x^2-y^2 - 2iy}= \frac{x^2+2x+1 + y^2}{1-1 - 2iy}=\frac{x^2+2x+1 + y^2}{ - 2iy}$
$x^2+2x+1 + y^2$ is reall. Let $x^2+2x+1 + y^2= r$ so
$\frac{x^2+2x+1 + y^2}{ - 2iy} = \frac {r}{-2yi} = \frac {r}{-2yi}\frac ii=\frac {ri}{2y}$.
Which is purely imaginary.
I know the question insinuates that z=−1
No, it doesn't.
$z$ can be any complex number number with absolute value of $1$ (except $z \ne 1$).
$z$ could be $\frac {12}{\sqrt{13}} + \frac {5}{\sqrt {13}}i$ for all we know.
So long as $x^2 + y^2 = 1$ and $(x,y) \ne (1,0)$ then $z = x + yi$ is possible.
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The point of multiplying by the conjugate is to get the imaginary terms out of the denominator not the numerator.
$\frac {1+z}{1-z} = \frac {(1+a) + bi}{(1-a) -bi} = \frac {(1+a) + bi)((1-a)+bi)}{((1-a) -bi)((1-a) + bi)}=$
$\frac {(1+a)(1-a)-b^2 + bi(1+a + 1-a)}{(1-a)^2 + b^2}$
$=\frac {1- a^2 -b^2 + 2bi}{(1-a)^2 + b^2}$
$= \frac {1- (a^2 +b^2) + 2bi}{(1-a)^2 + b^2}$
$= \frac {1- |z| + 2bi}{(1-a)^2 + b^2}$
And we were told that $|z| = a^2 + b^2 = 1$ so
$\frac {1+z}{1-z}=\frac {1- |z| + 2bi}{(1-a)^2 + b^2}=$
$\frac {1- 1 + 2bi}{(1-a)^2 + b^2}=$
$\frac {2b}{(1-a)^2 + b^2)}i$
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But we should be at the point where we don't need to write out $z = x + yi$ all the time. So long as we know that for real $k$ that $\overline {k \pm z}=k \pm \overline z$, $z + \overline z$ is purely real and $z -\overline z$ is purely imaginary, we are good. (Because $\overline z = Re(z) - Im(z)$ and $Re(k\pm z) = k \pm Re(z)$ and $Im(k \pm z) = \pm Im(z)$. And $z + \overline z = 2Re(z)$ etc.)
Then $\frac {1+z}{1-z} = \frac {(1+z)(1-\overline z)}{(1-z)\overline {(1-z)}}$ and.... well, now I'm just doing someone else's fairly excellent answer.
But really, the math and the notation is much simpler this way.