Let's start with the kite directly overhead at 300 ft above us. It moves sideways at the rate dx/dt = 25 ft/s where x is how far it has moved sideways in time t. The length of the line will be the diagonal length:
l = ((300)2 + x2)1/2
We'll take the derivative in order to obtain dl/dt:
di/dt = 1/2 (90000 + x2)-1/2 (2x dx/dt) using chain rule
There is a slight ambiguity to the problem, but I think that the 500 ft away is along the diagonal rather than in x (We can take advantage of the 3-4-5 right triangle: 300 up, 500 along diagonal, and 400 = x)
dl/dt = 1/2(90000ft2 + 160000ft2)-1/2 (2(400ft)(25ft/s)) = 8 ft/s
Hope that helps.