"I'm writing with a pen"
"I'm writing with a pencil"
"I'm drawing with a blue crayon"
and so on.
ボールペンでかいています。
or
ボールペンをかいています。
or what do I use?
ボールペンで書{か}いています is correct で = "by means of/with" in this context.
Your other sentence ボールペンをかいています would literally mean "I am writing a pen" which doesn't make any sense.